[freeandfreezing]

Pareto Optimality is a simple approximation of reality. It does not capture the higher order effects of innovation that result from participation in a wider variety of productive endeavors. It also does not capture the risk inherent in Pareto optimized allocation decisions.

Once a disruptive factor enters the situation the model is no longer useful.

Consider just one simple case, the gun producing nation and the butter producing nation get into a war.

[DoodleBob]

I agree, which is why I covered such typically unmentioned in Econ 501 elements in my narrative.