I don't know many specifics about Japan but here goes.  Japans interurban trains are both heavily subsidized <i>and</i> expensive - they're more comparable to air travel than any trains in America.<p>As for their subways, I'd guess it's because of density and parking.  The special wards of Tokyo (<a href="http://en.wikipedia.org/wiki/Special_wards_of_Tokyo" rel="nofollow">http://en.wikipedia.org/wiki/Special_wards_of_Tokyo</a>) are roughly equivalent to NYC - 8.8 million people, historic core, not including the suburbs or greater metro area.  The only difference is it's in half the land area.  So the whole special wards is twice as dense as NYC as a whole or about the same density as Brooklyn.<p>Looking at the largest cities in the USA (<a href="http://en.wikipedia.org/wiki/List_of_United_States_cities_by_population" rel="nofollow">http://en.wikipedia.org/wiki/List_of_United_States_cities_by...</a>) vs largest cities in Japan (<a href="http://en.wikipedia.org/wiki/Largest_cities_in_Japan" rel="nofollow">http://en.wikipedia.org/wiki/Largest_cities_in_Japan</a>) #1-4 are a perfect match and 1-10 are all pretty close in size, but I'm pretty sure Nagoya and Sapporo are much more dense than Houston and Phoenix.  So Japan also has more cities where subways can work.