For a child being called nigger in the street in broad daylight, laughing at the word is only a good strategy if you soon want to be laughing at a fist or a boot.

It's not the word, it's that the word is a challenge, and a threat. "Do something about it" is what a stranger calling you a nigger is saying. You're falling into an easy trap of thinking that the word "nigger" means something, and that this something is damaging the pride of the recipient.