RE: If that's actually the case then it's a better lyric. I kind of doubt it,
The book Shakey by Jimmy McDonough claims the song originated when Young was on tour in the late 1980s. He and Frank "Poncho" Sampedro saw newspaper photos of the Ayatollah Khomeini's body being carried to his grave as mourners were burning American flags in the street. Sampedro commented, "Whatever we do, we shouldn't go near the Mideast. It's probably better we just keep on rockin' in the free world." Young asked if Sampedro intended to use this idea as the basis of a song and when Sampedro said no, Young said that he would do so instead.[4] However Khomeini's death occurred months after the first live performance of the song.