Separated at Birth?
Legal did not like the mandatory Wednesday poker games that the Founder instituted after the Bull requiring Dirtlease staff to return to the office went out. The faux swinging doors and tinny player piano music grated. He did not like the smug look on the Founder’s face or the way Marketing chattered on about useless shit. He really did not like the way Economics took everyone else to the cleaners. ‘I’m dismal’, Economics liked to say. ‘Don’t mind me’. Then he would toss three grand into the pot and everyone else would look at their cards and throw them on the table.
‘Why don’t we play Indian poker’, the Founder asked.
‘You can’t call it that any more’, Marketing said.
Economics dealt. Marketing sat to his left, Legal sat across from him and the Founder sat at his right. At the hand of fecking God, Legal thought. The rest of us can’t kiss a square inch of rump. For the pre-flop, Marketing checked, Legal put in a grand and the Founder saw the grand. Economics raised another grand. When Legal looked at his hole cards, he saw that he had a pair of eights. Sure, sucker, he thought. I’ll take your money.
‘What do you think of Milei’, Economics asked.
‘I don’t like her poetry’, Marketing said. ‘It sounds like Mad Men’.
‘The president of Argentina I mean’, Economics said. ‘Not the lady poet.’
Marketing made a face.
At the flop, Economics dealt a two, a ten and a five of different suits. Marketing checked. Legal raised the pot a grand and looked at the Founder. The Founder saw the two grand. Economics saw the three. Marketing tossed in her cards. The Musak played a tune that Legal thought he had last heard on Sesame Street.
‘Have you filed the BOIR for Dirlease’, the Founder asked Legal. ‘The Beneficial Ownership Information Report. The filing that every legal entity organized in or doing business in the United States has to file with FinCen under the Corporate Transparency Act.’
‘Regulatory deadweight’, Economics said.
‘Legal transparency’, Legal said.
‘Guys’, the Founder said.
‘I think that transparency, KYC and anti-money laundering rules are good, but the point is moot’, Legal said. ‘The new administration has suspended BOIR reporting for domestic entities. We don’t have to worry about it anymore.’
‘One for the good guys’, Economics said.
‘Que Carles Bronson autografíe tu elenco con un martillo neumático’ Legal mumbled and felt for his weapons.
‘Knock it off’, the Founder said. ‘Both of yous.’
At the turn, Econ dealt a ten. Legal looked at the two tens on the table, thought shit, and put in two grand. The Founder smiled and placed his cards on the table, face-down. Economics saw the two and raised five. Legal saw the five and tried to remember his statistics course from college. ‘You’re not good with numbers’, his father had told him. ‘You are scared of blood. You can’t code. You write crap. You have no social skills. You are a follower, not a leader. Go to law school.’
‘I mentioned Milei because what he has done with rent control in Argentina is a laboratory case of how and how not to regulate the rental market’, Economics said. ‘Adam Smith prayed for this kind of data. It is a once-in-a millennium kind of thing.’
Legal felt a migraine coming on.
‘Why do economists hire prostitutes’, the Founder asked. ‘I mean, you guys could have any woman you wanted. Most women would walk over ten rock stars to get to an economist. Why pay for their company?’
Marketing pursed her lips and looked uncomfortable.
‘Is it more likely that a prostitute would hire an economist or that an economist would hire a prostitute’, Economics asked.
‘Answer the question’, Legal said.
‘We don’t pay sex partners to show up’, Economics said. ‘The market is saturated. We pay them to go away.’
‘Could you tell us more about Argentina’, the Founder said. ‘It sounded interesting.’
‘You think the manufactured housing industry in New York State has it bad’, Economics continued, ‘Until Milei was elected, landlords in Argentina were truly scrod. Before he took office, the country was undergoing rapid inflation and the peso was in free-fall. To protect tenants, the pre-Milei government instituted a series of laws that, inter alia, required property owners to offer tenants three-year leases with only limited annual rent adjustments allowed. Payments could only be made in pesos, and it was effectively impossible to get rid of non-payers.’
‘Could rents be increased between leases, the Founder asked.
‘Interestingly, yes. Leases had to be three years long, but there was no limit on rent increases between applicable three-year periods.’
‘Were there carve-outs?’
‘The law did not apply to short-term, Air BNB-type rentals of less than 30 days.’
‘I looked into visiting Buenos Aires two years ago’, the Founder said. ‘Flights were expensive but Air BNBs were dirt cheap. Was that because the market was flooded?’
‘The unforeseen consequences of the rent control laws were tsunamiacal’, Economics said.
‘Is that a Scrabble word’, Legal asked. He knew that he was pouting, but anger at the unfairness of everything bothered him.
‘A gray market in short-term, Air BNB-type rentals ate the formal market’, Economics continued. ‘A young couple moving to Buenos Aires, say, would be unable to find an apartment. Instead of a regular lease, they would enter into a series of 29-day short-term dollar-denominated leases. There was no guarantee that a future lease would be offered at a fair price or at any price. In the absence of legal rules, deals were done on a handshake.’
Economics stopped speaking long enough to deal a six for the river. Shit, Legal thought.
‘Many property owners just took rentals off the market. Buildings sat vacant. At one point in 2023, less than ten apartments were listed in all of Palermo.’
‘What is Palermo’, Legal asked. He hoped that he did not sound ignorant or petulant.
‘A neighborhood in Buenos Aires’, the Founder said. ‘I understand it is hip.’
‘And what was listed was crazy expensive’, Economics said. ‘Remember, inflation was very high in Argentina. 72% in 2022, 133% in 2023 and 229% in 2024. So, the only way a property owner entering into a three-year lease could offset the risk of inflation was to bake that risk into the Day 1 price of the lease. Even if you could find an available apartment, it was unlikely that you could afford to pay for it.’
Economics looked at Legal. Legal tossed in a grand.
‘So, what happened when Milei repealed those laws’, the Founder asked.
Economics saw Legal’s thousand and raised him seven. ‘Exactly what you would think would happen’, he said. ‘Supply went up and prices went down. Tenants benefited.’
Legal saw the seven and raised Economics two.
‘Are you sure you want to do that’, Economics asked.
‘Fuck you’, Legal said.
Economics saw the two and raised Legal twenty. As legal pushed his stack into the middle of the table, his eyes focused on a point behind the wall in front of him.
‘What were the tenant protection laws replaced with’, the Founder asked. ‘Were they amended, or were they repealed?’
‘They were replaced with nothing’, Economics said. ‘Other than the market.’
‘And what is it like now?’
‘Pretty good, I understand. Renters can find apartments that they can afford, leased for one-year terms. Property owners feel comfortable renting their buildings. Banks are back to lending again. The gray market has disappeared. Parties who enter into leases have the protection of the courts. It is, generally, a happy ending. Show me your cards, please.’
Marketing and the Founder looked at Legal and Economics like two people at a tennis match. Legal turned over his two eights. Econ turned over a five and a ten. Econ reached out to rake in the pot. Legal roared and reached for a pistol in his boot. The Founder grabbed his wrist and pulled it back into an armlock. Marketing grabbed the back of his neck in a Vulcan death grip. Legal lay bent over the table with his cheek mashed against the felt.
‘Now, now’, Econ said. ‘This is nothing that a good night’s sleep and an efficient market can’t fix.’
Legal spat out a few teeth. ‘Can you send me some of your hookers’, he asked.
‘Of course’, Economics said. ‘What kind of a guy do you think I am?’
😜