A NEW FLAG FOR EVERYONE! Literally. Everyone gets their own flag. Then a great flag battle takes place a la LOTR and the winning flag(s) become the new official flag(s). Then each year, a commemorative flag festival will take place in the outback, call it the Burning Flag festival, where they re-create this epic battle and then burn all the losing flags. A lot of flags would need to be produced, and a great commercialization of flags would result. This is maybe the best possible outcome. Or it could end like LOTF.
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