Okay, Sensei instantly rocking that guy was amazing.
Gonna bet the village chief perfectly understood that his village's prosperity was at the direct expense of everyone else. He's just an entitled little psychopath.
Part of the issue, and the emotional weight of this entire arc, is that you don't need to be a psychopath to end up participating in an issue like this; it doesn't take much to decide that you are not to blame in this mess, that you're just a victim, even though you knew—or could have known, at least—what was the cost of the benefits you were enjoying.
The instigator is a psycho, that much is certain, but the villagers aren't
inherently evil, they are merely (?) wilfully ignorant and selfish and he took full advantage of that; just as they found it easy to ignore the hardships of their neighbours, it's easy for us to paint them as somehow more prone to selfishness than us and that's wrong.