No topic has made me more disappointed in the Hacker News community than this one. It's frustrating to see my livelihood attacked by the very people I try to help every day. It's not the "big agencies" that spec work hurts. It's people like me. I've dedicated my life to design. I work with startups and small business to provide great design on small budgets. I don't want to go back to doing corporate work. I stopped when I realized the only people that cared less about the work than me were the clients themselves. So I decided to focus on small business. People that care about fresh ideas, innovation and quality products, like I do.
I'll spare you the book-length essay on why it's wrong to exploit the design industry like this. I'll just leave you with this: the only people that care about ethics in business are ethical businessmen. You are what you do. You can stab, claw and bite your way to the top or you can take a stand for something more important: integrity.
Next time, give yourself a couple of hours looking at local freelance designers. Call them. Ask them about rates, their design process, previously successful design campaigns and their approach to design. If you aren't satisfied after having at least tried, then go ahead and submit it to the design sweatshop in the cloud.