It's obviously a virtuous cycle, but in the case of European cities, they are the way they are because they began when walking was the preferred mode of transport ("preferred" is doing a lot of heavy lifting in this sentence, I know). The most luxurious transport option back then was a horse carriage, which is not much faster than walking. Everything had to be close to everything, streets had to be narrow.

Another important feature that makes public transport suitable is that they developed concentrically, having only one city center.

With such city planning in mind, public transport is the only rational way to move around lots of people on narrow streets.

North American cities very much were built around walking and trams.

The US auto companies paid for the destruction of tram lines with the long term goal of selling more cars.