I think it's a three-part problem. One, it is a flow problem, and by removing congestion at one bottleneck you mostly deliver traffic more efficiently to the next bottleneck. Actually increasing traffic flow is much more expensive than the cost of any single project. Second, over time, you end up with induced demand -- if you actually do get rid of all the congestion, longer commutes will become more practical, and traffic will increase until the marginal-next-commuter is discouraged from adding his car to the scrum.

Third, economic arguments are a little dicey for driving because driving is filled with externalized costs, subsidies, overoptimistic assumptions, and dependent utility. Driving creates noise and pollution (and it appears that the pollution is more deadly than crashes) but drivers don't pay that cost. There's personal crash risk, but people tend to assume that they are careful drivers and hence less likely to crash than the norm. The cost of the roads themselves is currently subsidized from the general fund; it's not a huge external cost, but it's a cost. Driving also creates (perceived) danger to people biking and walking; that tends to encourage them to also drive for their own (perceived) safety, even when they otherwise would not, and the congestion costs of driving also delay bus transit, making it less useful (it's already slower because of all the stops; traffic jams make it slower yet).

One explanation could be that people are lazy and will generally opt for the conveniences a car if the perceived disadvantages are relatively small. I and many people I know probably would consider a car if we lived in a city optimized for that.

Instead, because the city is optimized for cycling and public transport, I live in a culture where taking even public transport is frowned upon if the bicycle commute is < 30 mins (and even an hour, perhaps).

I think this argument applies to many things. In the city where I live, Amsterdam, there's (almost) always a supermarket at walking distance (or a 5-10 min. bike ride). In fact, this is true for the whole country, as far as I know. 'Hypermarkets' like wal-mart or Carrefoure never really took off. The reason for this is partly culture, but largely it's because of regulation that protects smaller shops.

Most people consider it a very good thing that we can walk to the supermarket and that we are, in effect, 'forced' to have a healthy lifestyle and culture.

Anyways, I just wanted to share how the fact that streets will fill up and hypermarkets will most likely be successful doesn't mean that this is a good thing, or that it's in our best interest.