All around us were people I had spent ten years avoiding--shapeless women in wool bathing suits, dull-eyed men with hairless legs and self-conscious laughs, all Americans, all fearsomely alike. These people should be kept at home, I thought; lock them in the basement of some goddamn Elks Club and keep them pacified with erotic movies; if they want a vacation, show them a foreign art film; and if they still aren't satisfied, send them into the wilderness and run them with vicious dogs.
The narrator expresses strong disdain for the people surrounding him, having spent a decade intentionally avoiding their company. He perceives them as a homogenous group, characterized by their physical appearances and predictable behaviors. This leads him to a rather extreme conclusion, wishing for them to be confined away from society in places that would keep them entertained yet isolated.
The quote highlights the narrator's contempt for conventional American culture and the perceived mediocrity of those he encounters. He suggests outlandish alternatives to vacations, indicating his deep-seated frustration with the banality he associates with these individuals. This reveals a critical view of societal norms and a longing for something more authentic and spirited.