Anyway, back to the topic... Why are you assuming the user is not intelligent/capable of making an informed choice ? Most people by now (we are talking about Internet users after all here) already know the implications of these ads towards their privacy. Yet 9/10 times they will choose convenience over it.
You are also assuming that time spent on YouTube is eating on time they would (rather??) spend on their families. What if the user watches Youtube at night when the family is asleep?
On to advertising. Some ads are indeed useful, despite of their tracking-based nature. Some are informational. Some are non-intrusive at all. I can't tell you how many times I've taken up a promo (on products I already use) because of a simple ad.
Putting all ads on the same bandwagon hurts the players who just care about serving marketing info and nothing more.
Foregoing ad-funded products or even ads themselves is not a binary decision. We need to get away from this mentality.
Do you want to have ads without tracking to fund the development of your service? Fine. Is that the case with Youtube?