A child must be harmed for the real stuff to be made. No children are harmed in making the fake stuff.
In answer to your comment, the pervs who traffic in kiddie porn do so for two reasons. One is, they get their jollies from it, which feeds their addiction and increases the chances they will act out their fantasies on a real child. The other is, they show kiddie porn (real or virual) to their victims as part of pursuading them that this is "okay."
In both those ways, virtual kiddie porn can wind up hurting actual children.
I haven't read the decision yet. As First Amendment lawyer I think it may be a "correct" decision under the First Amendment. However, it is a moral disaster, as others have pointed out.
Congressman Billybob
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Oh! so the harm only comes in the producing of the sicko stuff.
What about the harm that comes to the children from
the pediofiles who view it? It will not matter to them
if the picture is of a real child or computer generated,
they will get their kicks either way. Statistics
have proven that child molesters view child prono.