There is an excellent book--I think the title is Understanding Canine Behavior, and I think the author is Dr. Michael Fox (not that one)--and it goes into great detail regarding dog behavior and what they are capable of understanding.  Bottom line--when people say "He/she thinks she's a people" they are completely FOS.  The dog thinks YOU and I are dogs--and members of their "pack."  You MUST establish and show yourself to be the "alpha dog" in order to maintain control.  This is true of your wife and children too--every human must be dominant over the dog--or they will get snapped at, and possibly bitten.  If a dog growls at you--even if it's not your dog--you can put a quick end to it by grabbing it by the back of the neck, pushing it harshly to the ground, and put your mouth near there, teeth bared, snarling LOUDLY (like a dog).  This is a harmless, but strong display of dominance.  It is important to do this when the dog is a pup, in order to teach it its place in the "pack."  It will flip onto its back (or crouch/cower) and (likely) tinkle on itself.  This is the proper show of submission.  If you watch a mother dog, this is how she "spanks" or corrects her pups.  They respond immediately and absolutely.  You must be the "dominant bitch/mother" with your pup--and you won't have problems later.  It is important not to strike the dog, "rub its nose in its mess" or use other human-oriented discipline--they are not capable of understanding those things.  With adult dogs, you run a small risk of the dog refusing to submit, and actually getting into a "dog fight" with you.  If you have a good grasp of its neck, you can control it easily without being bitten, but DO NOT let go.  Snarl louder, and use your other hand to get it by the throat and choke it until it submits.  It's not nearly as violent as it sounds, and is harmless to the dog.  You will be friends after you are done.