Obligatory AnCap comment: Couldn't you do that without also paying for other services you don't use/want?
That's an interesting dilemma. There's a bunch of services that I don't really use, and it keeps me wondering why I pay that. Best example is, we have a 7$ daycare system for children. Each citizen in Quebec pay 7$/day and can use the daycare system for their children when they go to work.
I don't have any children, I don't use it and a couple of years ago, I didn't like that parents were "forced"(because it's so advantageous) to send their children there instead of educating them at home. For many years, I was against it, seeing it as a waste of money.
The thing is, the system, even if the waiting list is huge, it works. Some studies discovered it even pays itself, because the parent (usually the mother) who go to work instead of staying at home have a better revenue, so pay more taxes. Also, one of my mother's friend work in the daycare system. She's a professional ?educator? (sorry, I don't know the exact term in English) with formation and have a really job as a result. The government have rules and inspectors to insure a good service.
It's far from perfect, but it's not as bad that some people can say about socialism. Even me, I got convinced along the road that it's an interesting service that needs, at least, to be tried.
I think, the biggest problem with a social-democracy is that since the money is so centralized at the same place, corruption can take place and become big, because there's so much money around it. That's where the waste of money occur, and it's hard to make a perfectly efficient system. But still, I'm happy to pay for services that I don't use. Why? I believe we pay a lot less collectively. It's a matter of offer and demand. Let's take an example:
I need a pill badly, because I got sick, I have 7 days to live and I need it now. The seller of the pill, seeing the increasing demand, could charge me more (in a free market), and I would probably pay anyway, because I need it now. If instead, the pill was "socialized", where you get the pill free when you need it, but in exchange, you pay a little amount every year so that everybody can have that pill free when needed, the seller can't jack the price up when you need it, since it already been paid. You buy in bulk and sellers can't control the price to get more profit.
Let's take the example of the daycare system. Right now, nobody can jack the price up, even if the demand is crazy and some people would pay 40$/day. The price is guaranteed at 7$, and when I'm going to have kids, I'll probably appreciate it a lot more.
I know my answer is long and off-topic, but I wanted to explain clearly my position on your question. Even if you don't agree, I hope it helps you understand the socialists.
You make some good points, and they're the same points every socialist system has going for it:
"Everybody already pays for it, so when they need it, they don't have to pay extra"
"the price is fixed, and since everyone pays, that price is low, compared to what it would go for in a free market"
I'm not going to argue those points. As far as they go, they're absolutely true.
But here's the problem:
"I think, the biggest problem with a social-democracy is that since the money is so centralized at the same place, corruption can take place and become big, because there's so much money around it. That's where the waste of money occur, and it's hard to make a perfectly efficient system."
Let's take that pill, for instance. Let's say it's cost to produce is, oh, $5. (random number pulled from my rectum) The drug company that makes that pill lobbies the government to socialize the distribution of that pill. It will save lives, they say. This, also, is true. They're such altruists, in fact, that they're willing to ask only the cost of that pill from each citizen: $5. So, each citizen is now paying an additional $5 in taxes each year, which the government gives to the drug company, so as to make that pill available to everyone who needs it, free of charge. This is great. Lives are saved, and because the company is so nice, nobody pays more than $5 per year for the ability to have that pill, any time they need it.
But that pill is not something that needs to be taken once a year to save a life. It only needs to be taken once, and then is no longer needed, unless that condition springs up again, and most people never need it in the first place. Canada's population in 2011 was 34,482,779. That means that pharmaceutical company brings in $172,413,895 on that pill. It costs $5 per pill, and let's be generous and assume that 10% of the population actually needs that pill each year. That means that providing this service to the people costs them $17,241,390 per year. That's a net profit of $155.2 million, or $45 per pill.
In order to get that same level of profit, they would need to charge $50 per pill, and in a free market, there's no guarantee they could do that. A competitor could come along and choose to sell their pill for $45 (thus only making $40 profit, but that's still quite a lot). However, if everyone buys the $45 pill, the first company will likely drop it's price, down to $40. Or a third company could come in and offer the pill at $25. Eventually, the price of the pill will be reduced, by competition, to very near the actual cost of production. Probably around $7-$10 (and still, half of that price is profit).
So yes, the people who need the pill do end up paying a little bit more, in the end, than they would have had the pill been socialized, but that extra $137.9 million that isn't going to the pharma company can be used elsewhere by the people who don't need the pill... possibly even in paying for a charity to provide the pill to those people who need it at cost, which would still leave $120.7 million to be spent in other endeavors.
Now, obviously, these numbers are grossly simplified. But the concept is there.