Young Hound scared fo people/outside

Question
Hi, I purchased an 9 week old Basset Hound for my best friends birthday,and had him flown via American Airlines pet services to New York City from Saint Lous, MO. Well when we picked up the pooch he seemed a little shaken from the airpline ride, but as he has grown(he is now almost 2years old) he has been deathly afraid of new people and cannot go outside as he is scared of everything. He is a great dog when kept in-house(his territory), he loves my friend and his family and acts like a normal dog.......but as soon as new people arrive or he is taken beyong the back yard where his is comfortable, he automatically freezes up, starts shaking(tail between legs) and seems almost fully unconscious to his name or other calls.  He has never been abused from the time the family has had him in their care, I admit they spoil him greatly(because they love him) but there is no denying he has some kind of impairing phsycological condition.  I as a friend of the family believe that the only way the dog will learn to be social is through disciplinary actions and consistantly taking him to where he does not want to be at, which is outside his comfortable surroundings of the house. My friend and his family believe that this condition cannot be trained or changed in any way, and that this huge basset hound will remain a scared house dog for his entire life. What do you think, can taking him  out to places where he is not comfortable as to show him that he HAS to get used the outside environment will be beneficial to him or detrimental to his health? Thank you.  

Answer
Yes, start by taking him to the park and then to more louder places in time. Make him get used to animals and kids around him and then cars...
Let him spend more time in the backyard by using toys and treats. Pat him if he is scared, and feed him treats.
Good luck...