What if we only had two national parties, the Liberal Democrats and the Conservatives? Unlike others, I don't think this is a complete bat-shit crazy idea. I used to, but I am coming around. To look at this properly, one must look long term.
I won't worry about election outcomes, as that assumes this happens before the next election with the leaders and issues we have now. That will change. So it is irrelevant to speculate about that.
Like Potter, I agree that the Liberals are currently suffering because they are run by bozos. They need to find a narrative and stick with it. No one knows what they stand for, other than they are not the Conservative party. That didn't work for Martin and that sure as hell is not working now. But they're stuck in their little clown car hoping people will find them amusing again. They refuse to change.
But if the NDP and Liberals did merge into the Liberal Democrats, I think the unintended results will be the most interesting. To achieve a narrative, the party would have to shift more "left" to distinguish itself from the Conservatives.
So what happens to the Blue Liberals or Red Torys in this party? They have two options, join the Conservatives (thus moderating it and maybe making it more palatable) OR leaving and forming a new party (maybe resurrecting the Progressive banner and sucking talent away from the Conservatives). After a few years and a few more elections, I think the new party options is the most likely. But because it would be completely new, it would have to come up with clear positions and policies or it will wither on the vine. The knife edge of survival will dictate its success.
The Liberal party is currently failing as it is, or was, the big tent party. It cannot maintain a distinct identity that separates it from the NDP or the Conservatives. It is neither, but it is nothing more than that. It is a null void that is sucking up votes and talent to no purpose. By creating an even bigger tent, I think that will generate the rift needed to separate the competing ideologies. It will be a messy, probably jarring process. There are pent-up issues in the system that need to be addressed. A merger could help clarify the situation as MPs come to realize what it is they want to represent. The long-term result may well be worth the short-term conflagration as it could stabilize the federal political landscape for a while.
People resist change, because the true outcome is often unknowable. I think this time, it is the unknown that will provide the outcome we truly need.