I think the problem is that, like me, the kids are taught that:
- They are special
- They are moral
- God is with them
- Sinning is bad
- God rewards good people
So when they deal with the outside world, they see people that are not in their group and they see that those people are not special, are not moral, god is not with them, they are unrepentant sinners, and are not being rewarded because they are not good people. It's hard to blame a child for developing an arrogant uncaring attitude when those are lessons that they are taught from the womb.
Of course they also try to teach bullshit like, "hate the sin, not the sinner," which is supposed to solve the problem of treating unrepentant sinners like shit, but it really doesn't.