That democracy is faced with great challenges in the 21st Century where the world is flat is more or less a universal phenomenon. Whatever the causes of this conundrum are, the evolution of democracy has encountered a unique intervening variable in Europe, namely, deeper economic and political integration. What role does the EU play in the evolution of democracy in Europe? Has the existence of the EU reinforced or undermined the goal of “government by the people”? This article assumes that democracy is embodied in two components, namely, an input component (participation by the people) and an output component (outcomes for the people). It further assumes that the establishment of the EU is aimed at improving the latter, i.e., the output end of democratic performance. Based on these assumptions, this article examines the background, the key driving forces, the logic behind the institutional design, and the actual practices of policy-making in the Union, and finds that the relaunching of European integration that took place in the mid-80s was a crucial step towards the neoliberalization of democracy, resulting in severe income inequality, a breakdown of the social security and social welfare systems that the Europeans used to pride themselves in, and an erosion of the foundation for democracy even at the national level.