Really though, public transit is vastly better from a heath, independence, financial, and safety standpoint for the elderly than driving.
Given that won't work that well in a large city, but even then it's still better to be under people than sitting alone in your car.
A. Continue driving past the point they they are safely able to.
B. Become shut-ins due to lack of transportation, accelerating physical and mental decline.
People live in high density areas. The residents should have higher priority than folks from the suburbs who choose to drive rather than taking public transit. That means having usable and human-focused urban design.
I generally am very much for pricing in externalities, as you say. But when it comes to cars in very dense areas, there is a significant discontinuity in social cost between zero cars (pedestrians can freely use the streets, no traffic lights, etc) and a few cars (like in congestion pricing schemes). With even a few cars, walking becomes far more inconvenient, and there is much less public space.
In dense urban cores, a huge proportion of the land area is essentially vacant, only used by a small minority that choose to drive. It is really a bizarre way of doing things.
In my experience that's not quite the case. I lived in Barcelona's old town for about a year, and while it was technically legal to drive on many of the narrow, medieval-era streets, in practice it was enough of a pain that drivers rarely did.
Because of the high volume of pedestrians, the few cars that did come through were forced to travel very slowly and the burden was on them to avoid hitting anyone, not the other way around. So I don't think you have to go all the way down to 0 cars to get most of the safety benefits – there's a tipping point somewhere earlier.
Turning some areas into woonerfs might be a solution. It's also worth pointing out that many pedestrianized areas still allow delivery vehicles.
This is straight-up regressive: the dense areas are most premium, with transit-connected suburbs a close second, and car-oriented suburbs the only places affordable to the masses.
Banning cars from a city is a straight-up transfer of quality of life from the suburban masses to the richest in the center.
Drastically increasing high-rise housing supply in the center is a much more meaningful step.
What are you going to do with all those extra cars?
Traffic is irrelevant for trains
Not for trolleys!
Trolleys are just buses with fewer degrees of freedom.