Developers do speculative work for clients all the time. So, for that matter, do software security people, and the dollar value of an hour of software security work dwarfs both web devs and designers. But don't feel bad, because lawyers also do work on spec, and their bill rates crush ours.
Designers need to stop acting like some kind of special priesthood. Yes, people try to take advantage of them, just like they try to take advantage of everyone else. The answer isn't to brand every contest, audition, or consult project as immoral and exploitative.
As a programmer who founded a Digital Advertising and Design group this past year with a very talented designer, you couldn't be more wrong.
As a programmer, I have much more leverage when selling my services over that of a designer. There are a lot more "designers" out there than there are "programmers" and people use that to their advantage.
The fact is, you can go with cheap design because "it works" for most people (that's not to say it sells). However, with a cheap programmer there are a lot of the times that the code doesn't even work. That's the difference, and IT IS exploited.
Edit: That's not to say a designer shouldn't come along and contribute to this - I`m merely defending no-spec, which I agree with.
You can design for free, but don't do it with the anticipation that you will earn a living from winning the spec contest, do it because you want to support the project. This is much like a programmer would commit to an open source project.
I think you're overstating your case. So far, you haven't been put in a position where you had to deliver functional code of some form to win a bid for a project. Give it time.
If you're doing so well right now that you wouldn't even contemplate going out of your way to win a particular client, congratulations. I understand that's not an uncommon position for dev firms to find themselves in in 2010-2011. Just understand that the pickier you get about who you want your clients to be, the more work it will take to acquire those clients.
Designers need to stop acting like some kind of special priesthood. Yes, people try to take advantage of them, just like they try to take advantage of everyone else. The answer isn't to brand every contest, audition, or consult project as immoral and exploitative.