Miss Gates is being hypocritical because she says that America is better than Germany because we Americans not have prejudice, when in fact the town is prejudiced against African Americans.
Miss Gates is Scout’s third grade teacher. She asks her students to bring in information from newspapers so they can discuss current events. When Cecil Jacobs mentions that Hitler has been rounding up Jews, she explains that America is a democracy. Scout defines democracy as, "'Equal rights for all, special privileges for none." Miss Gates agrees, saying that Germany is a dictatorship.
"Over here we don't believe in persecuting anybody. Persecution comes from people who are prejudiced. Prejudice," she enunciated carefully. "There are no better people in the world than the Jews, and why Hitler doesn't think so is a mystery to me." (ch 26)
This incident demonstrates that little has changed in Maycomb. Miss Gates has sympathy for the Jews, but seems completely unaware that Maycomb treats its own citizens with prejudice every day, a fact that was just reinforced by Tom Robinson’s conviction. While Scout has matured and moved on, the town has not done the same.
Scout is aware of this hypocrisy, and confused by it. She does not understand how people can talk about the Nergoes that way.
Jem, how can you hate Hitler so bad an' then turn around and be ugly about folks right at home-" (ch 26)
Jem gets angry and tells her not to talk to him about it anymore. To him, the pain of seeing the reality of the world is too fresh. Scout is still trying to puzzle it out.