Because you can’t deal with crazies. The leadership of Chabad is in a court battle to get control of 770 and clean it up, but the issues are so convoluted that they’ll never win. People like me don’t set foot in 770 anymore. I left NY altogether, but when I lived there, I must have gone to 770 twice in 2 years (for simchas) after my first bad experience there.
Look at the pics of the Chabad Simchas Beis haShoeiva in CH this year. No flags. Last time I went, which was about 6 years ago, the meshuggeners took out their flags and were ignored. The die-hards are crazy and no one risks their lives being beaten up for the sake of getting a looney to put a flag away.
The strategy by and large is to let local yellow flag guys burn out, which they do eventually. A kid who waved a flag at 16 goes out on shlichus at 18 and knows no one wants to see his flag, so he stops believing in it once he gets used to not waving it.
EY and Israelis abroad (the source of most of the problem outside EY) are a different story. The medine has created such a social, political and moral mess that lunatics of all sorts rule the roost as people look to them to escape the mess that the zionists and worse yet, the post-zionists, have made of EY.
Yellow flag, NaNach, NK, phony mekubalim, neo-Carlebach, very strange mystical movements among the settlers, even Elior Chen and burqas – and many non-Jewish ‘spiritual movements’ – all a radical response to the malaise of secular EY. Wrong answer to a very real problem.