The terms "freedom" and "liberty" have become clichés

[Dale Eastman]

I think you misunderstand the meanings of freedom & liberty. Freedom is the ability to act in any way one chooses to. Liberty is the freedom that is allowed by a greater power.

The terms "freedom" and "liberty" have become clichés in modern political parlance. Because these words are invoked so much by politicians and their ilk, their meanings are almost synonymous and used interchangeably. That's confusing – and can be dangerous – because their definitions are actually quite different.

"Freedom" is predominantly an internal construct. Viktor Frankl, the legendary Holocaust survivor who wrote Man's Search For Meaning, said it well: “Everything can be taken from a man but one thing: the last of the human freedoms – to choose one’s attitude in any given set of circumstances, to choose one’s own way (in how he approaches his circumstances).”

In other words, to be free is to take ownership of what goes on between your ears, to be autonomous in thoughts first and actions second. Your freedom to act a certain way can be taken away from you – but your attitude about your circumstances cannot – making one's freedom predominantly an internal construct.

On the other hand, "liberty" is predominantly an external construct. It's the state of being free within society from oppressive restrictions imposed by authority on one's way of life, behavior, or political views. The Founding Fathers, who noted the distinction between negative and positive liberties, and codified that difference in the U.S. Constitution and Bill of Rights.

The distinction between negative and positive liberties is particularly important, because an understanding of each helps us understand these seminal American documents (plus it explains why so many other countries have copied them). The Bill of Rights is a charter of negative liberties – it says what the state cannot do to you. However, it does not say what the state must do on your behalf. This would be a positive liberty, an obligation imposed upon you by the state.

Thus in keeping with what the late Murray Rothbard said above, the liberty of the individual is the necessary condition for the flowering of all the other "goods" that mankind cherishes. Living in liberty allows each of us to fully enjoy our freedoms. And how these two terms developed and complement one another is important for anyone desiring to better understand what it means to be truly free.

To better understand what freedom and liberty mean, it's helpful to look at the respective etymologies of these words, digging into their histories and how they developed.

Freedom comes from Old English, meaning “power of self-determination, state of free will; emancipation from slavery, deliverance.” There were similar variants in Old Frisian such as “fridom,” the Dutch “vrijdom,” and Middle Low German “vridom.”

Liberty comes from the Latin “libertatem” (nominative libertas), which means “civil or political freedom, condition of a free man; absence of restraint, permission.” It’s important to note that the Old French variant liberte, "free will," has also shaped liberty's meaning. In fact, William R. Greg’s essay France in January 1852 notes that the French notion of liberty is political equality, whereas the English notion is rooted in personal independence.

In an interview with Lew Rockwell, Professor Butler Shaffer makes some interesting distinctions between freedom and liberty. Shaffer argues that freedom is the “condition that exists within your mind, within my mind. It’s that inner sense of integrity. It’s an inner sense of living without conflict, without contradiction, without various divisions and so forth.”

This point of view is in line with the philosophy of the Stoics. They believed that a person’s body can be physically imprisoned, but not his mind (much like Viktor Frankl famously said in his Man's Search for Meaning). Shaffer adds to the distinction:
“Liberty is a condition that arises from free people living together in society. Liberty is a social condition. Freedom is the inner philosophical and psychological condition.”

[Dale Eastman]

In short, freedom is inherent to humans. It exists within them by virtue of their humanity. Liberty is a political construct that allows people to enjoy freedoms such as property rights, free speech, freedom of association, etc.
Sadly, liberty has not been the natural state of mankind. History has shown that liberty – particularly of the individual – has been a distinguishing feature of Western societies, especially in the early years of the United States.
One of the structural problems with American politics since the advent of the Progressive Era in the early 20th century has been the emphasis on positive rights (aka "positive liberties," a misnomer at an individual level if there ever was one) at the expense of negative ones. What are the differences between negative and positive rights?
Philosophy professor Aeon Skoble provides a good summary:
“Fundamentally, positive rights require others to provide you with either a good or service. A negative right, on the other hand, only requires others to abstain from interfering with your actions. If we are free and equal by nature, and if we believe in negative rights, any positive rights would have to be grounded in consensual arrangements.”
For example, private property, free speech, and freedom of association are negative rights. In other words, these are rights that prevent others – above all, the state – from transgressing on you personally or on your property.
Along with these rights come responsiblities. In other words, you must bear the consequences of your actions as you exercise them. This is why you can't "falsely shout fire in a theatre and cause a panic" without bearing the consequences of the panic you caused, as Justice Oliver Wendell Holmes noted in Schenk v. United States in 1919.
Like all negative rights, free speech comes with responsibility; if you use that speech to spread information which is false and causes harm, then you're not protected carte blanche. Others can petition the court for the panic you've caused as a result of your exercise of free speech.
On the other hand, positive rights are granted by the government and involve the trampling of an individual or another class of individuals’ rights. These kinds of rights – like state-funded healthcare or public education – are justified on abstract grounds, such as the “public good” or the “general will.” By their very nature, they require the state to take from one group in order to give to another, usually in the form of taxes.
Appeals to the general will originate from the famous 18th century French philosopher Jean-Jacques Rousseau, who emphasized that a strong government makes individuals free and that individuals submit to the state for the sake of the greater good. If that sounds backwards to you, you're not alone.
Author James Bovard highlights some of the follies behind Rousseau’s thinking:
“Rousseau's concept of the general will led him to a concept of freedom that was a parody of the beliefs accepted by British and American thinkers of his era. Rousseau wrote that the social contract required that ‘whoever refuses to obey the general will shall be compelled to do so by the whole body. This means nothing less than that he will be forced to be free.’ ”
In other words, if you don't want to go along with the "will of the people" (or as Rousseau defined it, "the general will"), then the state can compell you to do so – even if that means trampling your individual rights and responsibilities.
Bovard also noted how Rousseau’s concept of freedom had nothing to do with the independence of the individual:
“C. E. Vaughan, in a 1915 study of Rousseau's work, correctly observed that, for Rousseau, ‘freedom is no longer conceived as the independence of the individual. It is rather to be sought in his total surrender to the service of the State.’ "
Rousseau (1712-78) was the first of the modern intellectuals, and one of the most influential Englightenment thinkers. He died a decade before the French Revolution of 1789, but many contemporaries held him responsible for it, and so for the demolition of the Ancien Regime in Europe.
One can see how Rousseau's ideas translated into actions when comparing the French Revolution to the American one. After all, ideas matter – especially in revolutionary politics.
Therefore your either/or is overly broad and a false dichotomy. Also, you need to define "nation" in this context. Not all "nations" are "states".