Human groups display phenomena which seem unconsciously motivated and which are revealed in labels, stereotypes and modern myths. Such phenomena can be understood through a methodology applied by both Freud in psychoanalysis, and modern structuralists in anthropology. The forces operating behind myths and stereotypes are opposites. Assimilation on the one hand works toward forming larger group units. Ethocentrism on the other, resists assimilation by mechanisms such as splitting, projections, condensations and displacements. People belonging to minority groups are vulnerable to projected distortions and through a mechanism of projective-identification they enter into a collusion in order to embody projected elements. Illustrations are provided and neo-Freudian modifications are suggested to replace Freud's explanation by means of an aggressive instinct, and extensive sampling from clinical practice as well as scientific and folk literature is used. The so called "Puerto Rican Syndrome" is analyzed as a modern myth.