If you really want to generate some hate mail, say something nice about Walmart (NYSE:WMT) in a public forum. According to the critics and self-appointed guardians of America's conscience, Walmart is an evil company that kills American business (by sourcing from overseas), kills American retail (by undercutting other retailers on price) and kills the American worker (by offering low wages and benefits). What's interesting to me, though, is how Amazon (Nasdaq:AMZN) gets none of this hate. While Amazon and Walmart are in many respects using the same model (offering customers the lowest prices available), you garner no shame, opposition or lectures in boasting about being an avid Amazon customer. So why is it that Amazon is "good," but Walmart is "evil?"

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

The Case Against Walmart
The complaints against Walmart have gone on for so long now, they will be familiar to most readers. Walmart has been accused of playing a major role in undermining U.S. manufacturing and simultaneously supporting/fostering unsafe and unpleasant working conditions among foreign suppliers, all in the name of saving money. Likewise, Walmart has been accused of pushing "mom and pop" retailers out of business and of mistreating workers by offering low wages and few benefits.

Let us examine these accusations briefly. It is true that Walmart sources from outside the U.S. ... as does almost every retailer. In many cases, it's all but impossible to find American manufacturers of certain consumer goods, and that's a process that began long before Walmart was large enough to influence it. Likewise, the rise of the mall was pulling consumers out of the city centers and away from "mom and pop" before Walmart came on the scene in a big way; Walmart may have been the coup de grace for local retailing, but the damage was already done by others.

Admittedly, the question of Walmart's labor policies is more controversial. While some critics point out that Henry Ford saw to it that his workers could buy a Ford car (and were paid above-normal wages), that overlooks an important detail - car-building demanded highly skilled workers. Walmart offers hundreds of thousands of jobs that require no schooling and virtually no skills. So, while it is true that Walmart does not pay high wages, a job at Walmart is still the best job that many workers can get on the basis of their skills and abilities. For those who believe that Walmart should nevertheless pay more, I ask this - when is the last time you told your dentist, lawyer or mechanic "no, that's too little ... let me pay you more?"

SEE: Minimum Wage: Good Cause Or Economic Pariah?

The Good That Walmart Does
Fairness dictates that if Walmart is going to be criticized for the bad things it does, then it should also be praised for the good it brings. Walmart pays a large amount of tax to the U.S., state and local governments - in the form of income tax, property tax and so on. In fact, Walmart is consistently one of the largest taxpayers in the country, with nearly $6 billion in taxes paid in 2012 (not all to U.S. governments, though).

Second, while people complain about the pay Walmart offers, it is nevertheless the largest private employer in the world, and the leading private employer in most states. Hundreds of thousands of Americans have jobs and pay income taxes because they have a job at Walmart. Moreover, the second largest employer in the U.S. ((McDonald's (NYSE:MCD)) is not exactly famous for great wages either.

Last and not least, Walmart's low prices enable consumers to buy more with their money. Walmart is not solely (or even mostly) responsible for the minimal wage growth in the U.S. in recent history, but Walmart's obsession with low prices has allowed shoppers to take their slow-growing paychecks and stretch them farther. Try telling a stressed-out Walmart customer that they're evil for going there and putting 10% more food on the table.

SEE: 15 Jobs That Have Increased Salary During The Recession

The Case Against Amazon
Contrary to what many Walmart opponents would like you to think, Walmart is hardly unusual in sourcing products from China and other emerging economies - Amazon does plenty of that too. While books are still largely published in the U.S., the electronics, clothes and other consumer products that Amazon sells come from the same countries and factories as the products that Walmart sells.

If Walmart has killed smaller retailers, what has Amazon done to the bookselling and book publishing industries? The family-owned bookstore is largely a memory now, and Amazon has also crushed Borders - a big-box bookseller that simply could not compete. Amazon has also put Best Buy (NYSE:BBY) under major stress in electronics and this phenomenon is spreading across other product categories. Perhaps the only reason that Amazon is spared from the charge of killing Main St. is that Walmart had already started the process before they showed up. Even still, Amazon is in the process of "Walmarting" numerous big-box stores - stores that employee thousands upon thousands of workers.

Amazon is also not necessarily the best corporate citizen in the world. Though there are fewer complaints about worker treatment at Amazon (perhaps because they employ so many fewer workers), there have been OSHA complaints and the warehouse jobs Amazon offers are not exactly white collar either. Moreover, Amazon pays minimal property tax and no sales tax - saving customers money, but taking away much-needed revenue from states. While Amazon has been lauded for its ultra-efficient operations, that efficiency means that Amazon needs far fewer workers - so what is worse, to have a low-paying job (like Walmart) or have no job at all because the company is built around systems and technology and not labor (like Amazon)?

SEE: 5 Alternatives To Expensive Textbooks

Why Does Amazon Get a Pass?
I suspect there are at least a few reasons that Amazon gets spared from the criticism that dogs Walmart. For starters, Amazon offers a very easy and very appealing customer experience - you can quickly find what you want, you don't have to rub elbows with other shoppers and everything looks nice. Compare the shopping experience at Amazon with Walmart at 2am and you will see what I mean.

Also, Amazon makes it absolutely clear how much money you're saving and everybody loves a bargain. Similarly, I believe that the Amazon's shopping experience makes a shopper feel as though they're somehow "getting away" with something - the product often carries a significant discount, there is no sales tax and the shipping is waived in many cases.

Lastly, but probably most controversial, I think there could be issues of class at work. Amazon is still all about the internet and still carries that cache - shopping at Amazon and saving money is "cool," or at least normal. By contrast, a lot of people believe that Walmart is where the poor people shop and nobody wants to have anything to do with that.

SEE: Four Online Shopping Alternatives To Amazon

The Bottom Line
Vibrant debate about business policies and ethics is essential to a free society, and there is nothing wrong with holding companies to high standards. All I question is whether critics and ethicists are being fair and consistent in how they apply their standards. Accordingly, I fail to see how Walmart is so exceptionally bad for America, but Amazon is somehow immune from the same criticisms and concerns.

At the time of writing, Stephen D. Simpson did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  2. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  3. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  4. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  5. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  6. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  7. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  8. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  9. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
  10. Investing News

    A 2016 Outlook: What January 2009 Can Teach Us

    January 2009 and January 2016 were similar from an investment standpoint, but from a forward-looking perspective, they were very different.
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center