Unless of course you set your settings to not allow tagging or just simply remove the unwanted tags. Or you could even request that the owner take down the photo if it's so embarrassing, and assuming they're not an adolescent they'd probably do it.
The hatred for Facebook here on Slashdot is really quite absurd, and not just a little ironic as well, given that people here usually criticize others for not understanding technology.
You can set the privacy settings how you want, sure they have defaulted to public in the past, but who here uses the default settings on anything without looking at the other options first anyway (and with government attention now they probably won't be making the same mistakes again)?
Certainly it can be a source of problems, but that's really only if you're stupid enough to share things that shouldn't be shared with a wider audience than appropriate. Think about what you share and who you share it with (normally a mantra for the /. crowd!) and you won't have any problems.
What you will have is a platform to connect with people you otherwise would be interested in but may not have the time/inclination to reach out to, a more efficient way of keeping up with those who you would have contacted by other means and an interesting way to pass time when you don't have anything to do/are procrastinating.
As for the "you are the product" people, well there's not much to do about them. You are correct, but also paranoid, egocentric and absurd. That's how the internet provides you with free content: ads. Targeted ads are more valuable so Google, Facebook etc collect data about you in order to provide you with ads.
What they don't do is sell your information, nor does anybody read it. Nobody gives a shit that you looked at looked at example.com or did a search for abc, or 'liked' a particular page. Nobody is sitting in a server room at Facebook jerking off to your "private" (read: incredibly mundane) data, you thinking that is just egotistical. The only thing that cares about it is their ad-targeting algorithms.