Summary: Anticipating Canada Day [and Independence Day], I invite the people of God to think what it means to live as "free people."
“Live as people who are free, not using your freedom as a cover-up for evil, but living as servants of God.” 
Being free and living as one who is free are two entirely different concepts. People who have been incarcerated for extended periods may have difficulty adjusting to life outside of prison walls. Through long confinement, these individuals have been conditioned to avoid making decisions on their own. Throughout the period of imprisonment, they were told when to wake up, when to go to bed, when to eat—essentially, they had no freedom to make decisions for themselves. In a more pragmatic sense, they have not been required to accept responsibility for any decisions related to the minutiae of life. Thus habituated, they discover that freedom is an intimidating concept. It is frightening to be responsible for one’s own decisions. However, freedom always carries the burden of responsibility.
The command to live as people who are free comes in what many today find to be a puzzling context—a call to submission. The only free people within contemporary culture are those who have learned the secret of subjection to institutions ordained for human good—government, labour and family. So that no one need be confused as to his concern, Peter identifies the principle institution in view as the government. Specifically, he names the emperor and governors. It does not seem wrong to take his point as meaning that we who are Christians are to work to foster an attitude of submission toward government—federal, provincial and local.
In the verses that follow, Peter will continue with his exposition naming specific institutions to which Christians are to subject themselves by naming (in the modern context) relationships to employers [1 PETER 2:18-25], marriage [1 PETER 3:1-7] and even the cultural milieu in which we live [1 PETER 3:8-12]. The general principle is that we are to first arrange ourselves under the reign of God, then in so far as there is no conflict to human institutions, we are to subject ourselves willingly to these other institutions.
I acknowledge that such voluntary subjection can be messy. Having experienced some conflicts in life, I can imagine the necessity of judgement calls requiring a conscientious Christian to act obediently to a human institution, even when other equally conscientious Christians disagree with the submission. At other times, a believer intent on honouring the Lord will find himself or herself in conflict with various human institutions, perhaps gaining the disapproval of fellow believers.
Whatever the situation, if we will honour the Living God, our response must reflect humility, even while soliciting the support of other believers. Each of us as followers of the Son of God must show consideration for our fellow saints. We will do well to recall the apostolic admonition, “I therefore, a prisoner for the Lord, urge you to walk in a manner worthy of the calling to which you have been called, with all humility and gentleness, with patience, bearing with one another in love, eager to maintain the unity of the Spirit in the bond of peace.” [EPHESIANS 4:1-3]. Above all else, we must ensure that we endeavour to know the will of God and boldly do that which pleases Him and honours Him.