7 month old lab

Question
We have a seven month old chocolate lab. We got him when he was 8 weeks old and we also have a 2 year old shitzu-bishon. The lab for some reason is scared of people and other dogs, doesn't matter about size or age. Our neighbors have a young wiener dog and our lab is frightened by him to the point of him turning and running to the house with his but dragging on the ground and his tail between his legs. I don't know what to do. He also knows how to get out of his cage in the house and he chews and tears things apart. Other than those issues he is a great dog. He is very obedient when i am home and when we run around. Please let me know what to do.

Answer
The crate may be easier to fix than the fear.  Without more details, I can't say how.  I have seen snaps added to the latch, a strap accross the door, and this morning I read somebody secured the corners with twist ties.  You just have to identify how he is opening it and how to fix it.  

I think such fear is more common with puppies that lived in a kennel past 12 weeks.  Control emotions.  He will sense any stress you feel,and it will add to the problem.  Don't coddle him, that rewards him for showing fear.  Stay upbeat and positive around other people and dogs.  Greet them as enthusiastically as is appropriate.  

The key to most behavior problems is approaching things using the dog's natural instincts. Dogs see all the people and dogs in the household as a pack with each having their own rank in the pack and a top dog. Life is much easier if the 2 legged pack members outrank the 4 legged ones. You can learn to play the role of top dog by reading some books or going to a good obedience class. A good obedience class or book is about you being top dog, not about rewarding standard commands with a treat. Start at http://www.dogsbestfriend.com/ As you praise the dog for following your commands, it will build its confidence.

Play tug of war with the dog and lose. However at the end of the game, take the rope or toy and put it up, less the dog becomes confused about who is top dog. Ropes from the pets' store quickly turn to hazardous shreds. Ones I made lasted much better. Go to a hardware or home center that sells rope by the foot. Buy 2' of 3/4" poly rope. Melt the ends, and tie knots in it. Get them as tight as possible, put it in a vise and pound it with a hammer. Watch carefully, and be ready to discard when it comes apart.