NOBEL IDEA TRIED ON DOWNTOWN EASTSIDE

Award-Winning Economist's Theory Used Against Drug Trade

The theories of a Nobel Prize-winning economist are behind the Vancouver
police department's latest strategy for controlling the rampant drug trade
in the Downtown Eastside.

The "transaction cost" theory, formulated by University of Chicago
professor Ronald Coase, found that trade is eliminated when costs of a
transaction are too high.

Inspector Jim Chu said Tuesday that Vancouver police plan to apply that
theory in the Downtown Eastside, creating higher transaction costs for
addicted users trying to sell stolen property.

Making selling stolen property tougher "helps close a circle. It makes it
tougher to complete the cycle and buy drugs and the result is less trade,"
said Chu, who has an MBA from the University of B.C. "Less trade means less
stolen property trading hands."

The Downtown Eastside is an efficient marketplace because items can be
purchased and sold at the same time, the street equivalent of the online
auction site Ebay, Chu said.

Addicts break into cars and homes and steal property in neighbourhoods
close to the Downtown Eastside, such as the West End, downtown, Broadway
corridor and Kitsilano, to minimize the transaction costs, Chu said.

Each day, hundreds of customers buy stolen property through pawn shops,
bars and at Thornton Park in the 1000 block of Main Street.

"This cycle is complete as the addicted criminals can instantly spend their
money with the drug traffickers who stand ready on every street," Chu said.

Sergeant Tony Zanatta said the people on the streets know the economics of
selling and buying.

During a walkabout in a two-block radius of Hastings and Carrall, Zanatta
stopped one man, who said he was from Alberta, and found stolen bottles of
Tylenol 3 and Valium in his jacket pocket. The man was selling them openly
for 50 cents a pill.

"That guy has hundreds of dollars in his pocket," Zanatta said. "He knows
that he can make money here, that people will buy from him here so he can
sell here."

The crackdown on stolen property is part of a two-pronged approach to
controlling the drug trade in the Downtown Eastside.

As well, 40 officers have been added to patrol the Downtown Eastside,
tripling the number of officers in the area for a three-month pilot project
aimed at dispersing the drug trade.

The department had asked for $2.3 million to maintain the program for an
additional six months, but that proposal was turned down Tuesday by
Vancouver city council.

Inspector Robert Taylor said undercover police officers began the crackdown
on stolen property, called Operation Embargo, a week ago Tuesday and
arrested 19 people for possession of stolen property, a majority of them
serial offenders with numerous convictions.

One 35-year-old Vancouver man, arrested last week, has 82 criminal
convictions and a rap sheet dating back two decades.

"He has been in and out of the system for 20 years and it seems the system
is having difficulty in managing and intervening in this person's life,"
Taylor said. "This person is a crime machine."

On the day the man, whose name police won't release, was arrested last
week, he broke into a car. Then, followed by officers, he scanned the
interiors of other vehicles, tried to enter a courier's van and was
challenged by the driver before withdrawing. Police arrested him minutes
later when he broke into a family van.

During the week-long undercover project, police recovered $30,000 worth of
stolen property and found items being bought and sold in Thornton Park,
three restaurants, two flea market stalls, one grocery store, and one
second-hand store.

The most popular items to steal are compact discs, which are sold for $2 on
the streets. Stolen good sells for 20 to 50 cents on the dollar of what
they're worth retail.

Other stolen goods, such as tools, are also readily available in the
Downtown Eastside

Another item police are reporting finding on the streets is expensive
chocolate, taken from exclusive stores on Robson Street.

Recently, police found $120 worth of high-end chocolate selling for $5 in
the Downtown Eastside.

"The amount of crime and the amount of losses by businesses and people are
just massive," Taylor said. "If we can interrupt the cycle of stolen
property being converted to cash, it will reduce the disorder caused by
crack cocaine."