The ESG Dragon and the State Treasurers | Derek Kreifels | EP 344

Unveiling the Free Market's Role in Public Finance: Insights from Derek Kreifels

In this engaging podcast episode, Derek Kreifels, CEO of the State Financial Officers Foundation, shares his expertise on the critical interplay between public finance management and free market principles. With his background as a former deputy treasurer of Kansas and a pivotal figure in establishing a foundation aimed at promoting free-market perspectives in public finance, Kreifels provides invaluable insights into how states can navigate financial challenges while ensuring fiscal responsibility.

Core Concepts and Philosophies:

Kreifels and the host delve into several foundational concepts central to the podcast discussion:

• Free Market Advocacy in Public Finance: Emphasizing the importance of maintaining a free-market stance in managing state finances, Kreifels discusses the benefits of economic freedom and minimal government intervention.
• Fiduciary Responsibility: A significant focus is placed on the fiduciary duty of state financial officers to manage public funds with integrity, prioritizing the financial health of state investments and pension plans over political or social agendas.

Practical Strategies and Advice:

Derek Kreifels offers several strategies for improving financial management and enhancing the fiscal autonomy of states:

• Resistance to ESG Constraints: Kreifels advocates for state financial officers to resist external pressures from ESG (Environmental, Social, and Governance) investing principles that might compromise the financial returns of state pension funds and other investments.
• Legislative Actions: He discusses successful cases where states have passed legislation to prevent financial institutions from boycotting industries like coal, which are vital to some state economies.

Supporting Evidence:

Kreifels references the creation and growth of the State Financial Officers Foundation as a testament to the need and effectiveness of a unified platform for state treasurers to champion free market principles. He also cites specific legislative successes that have safeguarded state interests against potentially harmful financial ideologies like ESG.

Personal Application:

Kreifels shares his journey from a small-town background to becoming a key player in state finance, illustrating his personal commitment to principles of transparency and economic freedom. His professional trajectory underscores the practical application of his beliefs in his daily responsibilities.

Recommendations for Tools and Techniques:

To implement the strategies discussed, Kreifels recommends:

• Engagement with Policymakers: Encouraging state financial officers to actively engage with legislators to craft laws that protect their states’ financial interests.
• Educational Initiatives: He emphasizes the importance of educating both the public and other financial officers about the impacts of non-financial factors on investment returns and state finances.

This episode provides a comprehensive look at how adherence to free market principles can significantly influence the management of state finances, offering practical advice and strategies for other financial officers and policymakers.