Does induced demand affect busses as well?

The induced demand part involves a cycle of expanding roadways and then building detached housing to use that roadway.

This would happen with buses, trams and bikes as well but for them the matching housing is a high-density urban fabric, and this is much more frequently blocked by zoning than detached houses. So we get essentially housing crises with incredible prices for quality urban areas as the demand is pretty huge, and some absolutely jam-packed bus and train routes, but following up on that is politically much harder than destroying some farmland or nature area to build suburbs.

• If traffic is bad then it's treated as a problem that must be solved
• If transit is packed like sardines then it's often ignored
• If housing that enables a low-car lifestyle is incredibly scarce and expensive it gets waved off with stuff like "it's not a human right to live in the city" or "but a big building will cast a shadow on my lawn!"

On a road without dedicated bus lanes, then buses and cars are essentially fungible. Who wants to be stuck in a traffic jam inside a packed bus with standing room only?

If the bus has its own lane then it becomes effectively a different mode of transport with higher capacity and lower point-to-point time. At that point it will begin to induce its own demand. Similarly, new bike lanes and metro lines are always empty at first, then they fill up. And the resulting world is much nicer than the one where everyone was in a car.

It does. It does with every mode of transport (except for really rare and really weird cases).

The difference is in terms of scalability. Public transit like trains and buses are a lot more scalable than cars. A city that entirely uses public transit would be a lot more cost and space efficient and would be a lot better for the environment compared to a city that entirely uses cars.

The "induced demand" argument is primarily used against the "just one more lane will fix the traffic bro" argument. The complete argument goes as follows: Building one more lane for a given road won't end up reducing private automobile traffic. In fact, it would induce demand for travelling using private automobiles, thus increasing the demand for road space, thus making the road reach capacity a lot quicker than expected. Is it technically possible to design a city around cars, such that all its inhabitants can drive to their destinations? Sure. The costs (financial, environmental, health, etc.) however are huge. We don't want to pay these costs. Most individuals are not aware of these costs and are misled into believing that these costs are a lot less than what they actually are.