DS (aged 9) told me an Irish joke last night which he had got from his granddad. I gave him a little talk about how it wasn't nice to make jokes about different nationalities and suggested he didn't repeat it - but only after I'd laughed about it with him. (I actually laughed involuntarily as it was a reasonably funny joke).
DS's response was that his granddad had also told him a joke in which the Englishman was made to look silly. 
Questions for the MN jury?
How would you deal with your DC telling jokes based on national stereotypes?
Should I tell my dad not to furnish DS with more similar Englishman/Scotsman/Irishman jokes?
Should I be flamed for laughing?