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As someone who used to live in a loft on Folsom Street (sooo not a main street by the way,) I have seen the fair. Not nearly as shocking as I thought it would be, and very few children who were no where near anything worse than an average trip to the beach.
It's just not in a place where you might accidentally end up there. That part of Folsom Street is bars, clubs, and art lofts, mixed with rehab centers and homeless shelters, although some of it has gone condo, and you might see the fair naturally evolve to the tamer side of street fairs based on the changing neighborhood.
I have seen way more offensive things walking through SF's civic center up to city hall.
The bourbon street comparisons are pretty accurate as far as the amount of public shock goes. It really isn't worth all the outrage.
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