It turns out Eskimo doesn’t mean ‘eater of raw meat’:
In spite of the tenacity of the belief, both among Algonquian speakers and in the anthropological and general literature [...] that Eskimo means ‘raw-meat eaters’, this explanation fits only the cited Ojibwa forms (containing Proto-Algonquian *ashk- ‘raw’ and *po- ‘eat’) and cannot be correct for the presumed Montagnais source of the word Eskimo itself. [...] The Montagnais word awassimew (of which ay- is a reduplication) and its unreduplicated Attikamek cognate exactly match Montagnais assimew, Ojibwa ashkime ‘she nets a snowshoe’, and an origin from a form meaning ‘snowshoe-netter’ could be considered if the original Montagnais application (presumably before Montagnais contact with Eskimos) were to Algonquians.
It’s generally assumed among up-to-date English-speakers that an ethnic group should be called by whatever it calls itself, not what outsiders call it.
Yet, practically no one outside of the Anglosphere worries about this principle at all. For example, Inuit Eskimos call French Canadians “Uiuinaat” or “Guiguinaat,” from the French word “oui” for “yes.” Anglophones are known as “Qallunaat.”
Considering how hard it is for English-speakers to correctly pronounce words even from other European languages that share our basic alphabet, asking Americans to accurately transliterate words from radically different phonetic structures would appear close to hopeless.
It’s become common, for instance, for Western journalists to refer to the “Qu’ran” [sic; should be "Qur'an"] instead of the traditional spelling of “Koran,” but virtually no American understands what sound the apostrophe in “Qu’ran” stands for. Nor could many even produce that sound properly.
Beyond the pronunciation difficulties, outsiders’ names are actually often more useful than insiders’ names for themselves.
Outsiders can enjoy a broader perspective that lets them see the similarities among ethnic subdivisions. In contrast, insiders can be so obsessed with small differences between themselves and their kin that they can’t see the forest for the trees. That’s why insiders’ names — like “Inuit” — sometimes discriminate against smaller groups, such as the Yup’ik Eskimos.
Tom Alton, the editor of the University of Alaska at Fairbanks’ Alaska Native Language Center, pointed out, “The name ‘Eskimo’ is considered derogatory in some areas of the North but is still acceptable in Alaska, mainly because Alaska includes Yup’ik people who are closely related culturally and linguistically but are not Inuit. ‘Eskimo’ includes Yup’ik as well as Inuit.”
Further, the word “Eskimo” is less ethnocentric than is “Inuit,” which implicitly draws a distinction between “the people” (the Inuit) and all those non-Inuit. Ironically, the movement to change ethnic names to those used by the groups themselves frequently restores these kind of self-glorifying terms. For example, Comanche Indians are now supposed to called the “Numunuu,” which means “the people.”
Sailer continues with a great discussion of why it’s ridiculous to use “San” for Bushmen, who hate the term: “It quickly became a badge among Western academics: If you say ‘San’ and I say ‘San,’ then we signal each other that we are on the fashionable side, politically. It had nothing to do with respect. I think most politically correct talk follows these dynamics.”