After laying all of that out, I'm still ambivalent about third parties within the current system. Perhaps the answer lies in changing the system so that third parties have more of a chance in national elections (in local elections, party labels are often just there to capitalize on brand name recognition -- call yourself a Republican, and you've already got 40-60% of the vote). To be honest, though, I have no idea how to go about enacting the necessary changes. Over at Crooked Timber, there is a good discussion on what might do the trick, with reforming ballot access rules being the primary suggestion. Ballot access has clearly been a problem for Nader, but even if he were on the ballot in every state, it's still highly unlikely that he would receive more than 4% of the popular vote. One commentator has an interesting suggestion. He writes:
The better way to get real, viable alternative parties is through fusion. New York State has fusion, where a candidate can run as a Democrat and as a Liberal party endorsee. Because of that, New York has several parties whose endorsement swings close elections. Giuliani originally became mayor in large part because the Liberal Party endorsed him. Dyed in the wool Democrats couldn’t actually vote for a Republican, but how bad could a Liberal candidate be? Similarly, Pataki won the governor with the endorsement of the Conservatives.
I'm not very familiar with New York state politics, but my suspicion is that while the motivation to get endorsements from third parties, in addition to one of the major parties, might make candidates move a little to the left or the right of the major party's center, it will do little to break up the two-party system in a meaningful way and allow truly ideologically different candidates to have any chance, particularly at the national level.
So what are we to do? Continued dominance by the two majority parties will never allow for political diversity at the federal level, and will probably continue to give us uninspiring third party candidates like Nader and Badnarik. Why would a highly competent Socialist, Green, or Libertarian run for national office when he or she can probably do more good through activism? Yet, there are no obvious ways to break up the two party system (even at its periphery), and as a result, even those of us who find both of the major parties offensive will likely vote for one of their candidates, just to keep the other one out of office. We're forced, out of practical necessity, to be part of the problem. It's pretty damn frustrating. Sometimes I wish I was apathetic instead of ambivalent.