I agree that trams (i.e. LRT that runs at-grade and in the streets) in essence act a lot like busses. That is the point. Some bus lines have too many passengers to be able to function properly using buses. Trams provide the extra capacity already needed as well as attracting both more passengers (about 30% iirc) and more investments in the areas it goes through. The added capacity and added attraction is important on many line to alleviate other already crowded rail lines.
What about subways in such a case? Sometimes it would be very helpful, but often a subway would mean much further walks to get to the vehicles and from the vehicles to one's destination. Subways are for longer trips. I'd go so far as to say a tram line running on the same street that a subway line runs under can be a good set-up (note: if one has 3-5 more stops per km on the tram line than the subway line). Won't always be, but if there's enough need it will work beautifully. Just like a Subway + bus line can if the passenger numbers are slightly lower or the subway is closer to the surface or has more frequent stops.
The whole "trams/LRT are bad, subways+busses is good" schtick is so 60s to a Stockholmer like me. Up until about 1990 the planners and the transit agency here not only closed down all the urban trams almost over-night, they kept trying to get everything that wasn't subways, busses or commuter rail shut down. Some politicians still are very dismissive of everything on rails that isn't subways/commuter rail. Over-crowded inner city bus line? build a subway on the same alignment! Never mind that it is very bendy and parts already have subway lines running right under the same streets. Gah!
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