It's not that Americans are stupid and the rest of the world is smart. The problem is that you typically pay the same monthly service fee whether you take a subsidized phone or not. To go buy your own phone at full retail price is leaving hundreds of dollars on the table. (T-Mobile is the notable exception as they let you pay slightly less for a contractless plan.)
Also, few people are willing to buy an expensive phone that they can't even hold in their hand first. My understand was that Google was going to try to get the phones some retail space in e.g. Best Buy.