Psychic powers exist. At least, there are enough stories to be pretty certain they do. They’re rare in the extreme, presumably, although the distrust shown to any confessed psychics mean a lot of people probably keep their abilities to themselves.
It’s not really suprising that people fear psychics – who wouldn’t be afraid of someone who can get inside your mind and do who-knows-what to it? In many places, ‘witches’, ‘freaks’, and any other local name for those with uncanny powers are ostracised or even killed.
There’s another reason people fear psychics beyond the obvious – stories often tell of psychics who can’t control their abilities, who are driven mad by their power, and who pass on their abilities like a plague, ripping down the walls of sanity for everyone they meet.
Prior to the Burackkan liberation, the Giant Robot Overlords were attempting to breed and indoctrinate psychics in the hope they could fix ‘Mother’. It didn’t work, and actually made things worse.