It's a collective action problem.
The psychological impacts come from secondary network effects. The studies suggest that taking social media away from just your kid doesn't do anything, because the culture wherever they go will still be driven by it.
So the only way I can protect my kids from it is to pass laws to force other parents' hands.
It is not necessary to dump our kids into institutions to be raised by their peers. It is necessary that you don't make decisions for other peoples kids.
Whether you legalize social media or not (or smoking, or drinking, or riding in a car without a seatbelt), that's making a decision for other people's kids. Choosing parental liberty is still choosing.
I sympathize with the libertarian impulse but for me, protecting my kids from other parents' poor decisions comes first.
Parenting your child is not a political ideology. What a world we live in.