The psychologist Elliot Aronson describes scapegoating as the tendency to "displace aggression onto groups that are disliked, that are visible, and that are relatively powerless." In medieval times, the Catholic Church regarded buying with the intention of reselling at a higher price as unjust, and merchants who marked up prices during times of scarcity were often vilified. In England various forms of commodity speculation became crimes punishable with fines, pillory, and imprisonment. Such prohibitions on speculation backfire. Merchants then have no incentive to store or transport goods to the time and place where they are most needed.
Speculators are blamed for the suffering of others because they seem to receive without giving, in apparent violation of a basic norm of fairness. Speculation is denigrated as mere gambling, as opposed to wealth creation. There's also the accusation of greed, but that's just piling on. Dentists, like speculators, like to make money, but are not condemned for greed, but we don't mind because we see the value of keeping our teeth.
In contrast, the benefit provided by the speculator is usually missed. Consider a commodity speculator who buys a good (call it wheat) cheaply in a fat year and stores it in the hope of selling high in a lean year---a risky and costly enterprise. This drives up the price today, reducing consumption. That leaves more wheat available for a leaner year when it is needed more. This is Adam Smith's invisible hand at work. Speculators and dentists, following their own self-interest, feed the hungry and fill cavities.
But what consumers notice is that just when they are going hungry, the speculator is charging an unusually high price. Even worse, the speculator may buy in a lean year because he expects that next year will be even leaner. Now he'll stand accused of stockpiling wheat and driving up the price while children starve.
Some commentators, in defense of recent oil speculation, point out that speculators drive prices down just as often as they drive prices up. True, but irrelevant. Smart speculation benefits society just as much when it pushes prices up as when it pushes prices down. Either way, the benefit to society is that information gets into prices sooner, which helps people make better decisions.
For example, a rise in oil price reflects news about greater scarcity of oil, and encourages exploration, conservation, and research into alternative energy sources. It discourages building houses in distant commuting suburbs. It's the price change that causes the appropriate response. So the complaints that speculators play a short-term game have things backwards. Suppressing speculation is like squeezing your eyes shut on the highway because it's blissful to be ignorant of obstructions ahead.
The bearer of ill tidings is always unpopular, especially when the tidings make the bearer rich. So when speculators do well, people become envious. But what really makes people mad is the perception that speculators are the cause of bad times. This is a natural confusion. If speculators buy and drive up oil prices, and sell and drive down the stock market, they must be impoverishing us. Except that the speculators are usually just helping the market incorporate bad news that was bound to arrive anyway. They just advance the timing. No, the waiter didn't burn your steak, he just brought it. And that's a good thing, because now you can make new dinner plans.
Of course, speculators make mistakes, and sometimes speculators really do fraudulently manipulate prices. Some dentists are quacks too. But virtuous speculation is regularly lumped together with abuses for blanket condemnation.
Specuphobia, like the fear of the occult, is naive, and, in our modern age, unseemly. In arguing for freedom to trade in grains, Adam Smith compared laws against speculation to laws against witchcraft, which had given any man the "power to gratify his own malice by accusing his neighbor of that imaginary crime." Having abandoned witch-hunting some time ago, it is time for us to outgrow the dread and loathing of speculation.
