My Magic Mouse will not highlight text

Have you installed and run any "cleaning", "optimizing", "speed-up", anti-virus or VPN apps on your Mac?

Give this a try: boot into Safe Mode according to How to use safe mode on your Mac and test to see if the problem persists. Reboot normally and test again.

NOTE 1: Safe Mode boot can take up to 3 - 5 minutes as it's doing the following; 

• Verifies your startup disk and attempts to repair directory issues, if needed

• Loads only required kernel extensions (prevents 3rd party kernel/extensions from loading)

• Prevents Startup Items and Login Items from opening automatically

• Disables user-installed fonts 

• Deletes font caches, kernel cache, and other system cache files

NOTE 2: if you have a wireless keyboard with rechargeable batteries connect it with its charging cable before booting into Safe Mode. This makes it act as a wired keyboard as will insure a successful boot into Safe Mode.

Please read the following user tip and restate your question/problem in detail: 

     Writing an Effective Apple Support Communities Question - Apple Community

What model and years is your Mac?

What system are your running?

In what apps are you not able to copy and paste? All?

If not all then when you're having problems copying and pasting click on the Finder icon in the Dock and then on the app icon you're in and try again. That regains focus in the app and lets the cursor work as it should. I get the same issue in Ventura.