The neoclassical problem of distortionary taxation and the Hayekian knowledge problem are two different lines of argumentation against government interventions. When it applies, the Hayekian argument against government intervention is stronger than the neoclassical argument, because interventions can be designed to minimize distortions, but governments cannot escapethe knowledge problem. A Hayekian welfare state would combine low levels of regulation with social insurance schemes that are not terribly vulnerable to the knowledge problem.
Bergh, Andreas (2015),
"Yes, There Are Hayekian Welfare States (At Least in Theory)".
Econ Journal Watch