Businesses, especially consumers, are helped more by the mobility of a car than public transport
>improved mental health of passengers
1. This is not an external benefit. This, if true, should mostly be reflected in people's willingness to take public transport. Of course, people taking public transport are in my experience usually of the most dubious mental health. So that's concerning.
> reduction in pollution and traffic
Fair points.
Traffic is by far the best case for running public transit at a loss, IMO. Though it must be weighed against spending that money on more freeways.
There are benefits, though not as many as you are listing, and we should be weary of running them at too much of a deficit.
In general the idea of running things as a business is not to say they should be run at a profit, it's to say they should be run efficiently like a free competitive market typically does.