David Henderson hypothesizes about why the phrase “it’s a free country” has changed in useage:

First, when I grew up in the 1950s and 1960s, not many people around me considered that a sassy reply. When I used the line, it was shorthand for, “I have rights; maybe this isn’t the best decision, but I have the right to make my own mistakes.” Second, almost no one uses that line any more. Why? I think it’s because, if only subconsciously, most people recognize that in some important ways, freedom in the United States has declined.

I think David is misunderstanding what happened to “it’s a free country”. What really happened was that obnoxious people used it as a phrase to justify obnoxious behavior for which there was literally no excuse other than “I am legally able to do this”. For instance, you might expect the man screaming at his kids while waiting outside a restaurant to yell “it’s a free country!” to the gawking crowd. Or the woman blowing smoke on a baby carriage. Or  the teenager littering an empty 32 ounce bottle of Mountain Dew in a graveyard. Or the older Canadian economist who won’t turn down the Sean Hannity book-on-tape that he’s blasting on a public bus. Or countless obnoxious movie theater behaviors (seen below).

I think the problem here is not a subconscious realization of the decline of freedom, but the fact that the brand of the phrase has been ruined by a few generations of obnoxious American’s for whom it was a thoughtless defense of behaving atrociously.

[UPDATE: See David Henderson in the comments]

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