You answer an empirical observation from the world of politics with a theory from the world of economics?
[WS:] I was trying to put what you call empirical observation in a broader context. The difference between Dems and Repugs today may be large comparing to what it used to be, but it appears quite small comparing to the size and diversity of the US population. The Hotelling's law speaks to the later.
To put this in a different way, the US has the population similar to the combined population of Western Europe. The US population of 300 million is represented by only two parties, the Western European population of a similar size is represented by several dozens of national parties and nine political groups in the European Parliament http://en.wikipedia.org/wiki/European_Parliament_political_group.
By the latter standard alone, the diversity of political representation in EU is 4.5 times larger than that of the US. By that standard, the difference between Dems and Repugs is not as large, even if it increased in the last couple of years.
Wojtek