I think that Ondrasik is trying to be cynical in the first verse, but oddly enough, I agree with the narrator: A flag is nothing more than a piece of cloth. It's a symbol, and I don't have much use for symbols. A guitar, though, I have use for. Even a broken one -- you could fix it, and then use it to play a song. What's a flag good for? All you can do is stare at it. So the narrator's right (or at least, that's what I'd have done):
"I got me that guitar/ What's a flag in a pawn shop to me?"
I think that Ondrasik is trying to be cynical in the first verse, but oddly enough, I agree with the narrator: A flag is nothing more than a piece of cloth. It's a symbol, and I don't have much use for symbols. A guitar, though, I have use for. Even a broken one -- you could fix it, and then use it to play a song. What's a flag good for? All you can do is stare at it. So the narrator's right (or at least, that's what I'd have done): "I got me that guitar/ What's a flag in a pawn shop to me?"