In general I would agree with you, but one issue I have here is that I think social media even done fully responsibly would end up being very undesirable for children. Even if we have no algorithm and just 'friend on friend' stuff, social media tends to significantly amplify a lot of the nasty stuff that happens at every school - bullying, rumor milling, conspiratorial stuff (like kids falsely reporting somebody else to try to get them in trouble), and so on.

There's also the typical image crafting stuff that drives envy, insecurity, and so on - kids aren't sharing when they eat left overs mashed up in a bowl, but they are sharing when they go eat at an expensive steak restaurant. That bias already significantly affects adults perceptions of others' life/lifestyle, let alone children. And even without 'the algorithm', there's going to be FOMO and the general addictiveness of updates that's going to leave kids as zombies to their phones rather than interacting with each other as much in real life.

So I'm not really sure it's viable to try to 'fix' social media. You can certainly make it better than it currently is, but I think the issue is that we have horrible companies managing a horrible product.