There's no contradiction here. It's resolved because, relative to its original promise, the STS program was a complete failure. Yes, it did wind up doing a bunch of useful stuff. But it didn't achieve nearly as much as was promised, and what it did do cost vastly more than anticipated.
Source: my grandfather. He was a project manager on the Hubble, and specifically on the ill-fated mirror, this being simultaneously his greatest pride and greatest embarrassment. We talked about this stuff often. According to gramps, and not denying that there were major errors in the Hubble mirror management, they wound up getting screwed by the STS failures. It was always understood that the mirror wouldn't be perfect because they expected to be unable to perfectly compensate for the deflection of the mirror due to gravity while it was being manufactured. The STS promised the ability to deliver the Hubble to orbit to test it, and bring it back down again to correct if necessary. In the end, something like this was eventually required, but only many years later, and not in the fashion that the initial STS mission would have allowed.
From https://idlewords.com/2005/08/a_rocket_to_nowhere.htm, which contains far better analysis of the politics of the STS program than I can provide.
But that was doomed by the design requirements tug-of-war between government agencies, being a bit too early and ambitious, and the drop in flight rate and commercial and defense payloads after Challenger.
Today we've seen incredible advances in booster recovery and reuse in part spurred by learnings from shuttle reuse including the learning about how expensive heat shield maintenance/refitting turned out to be on the shuttle.
(A bit of an aside, but ironically and sadly the Challenger disaster didn't "fail hard enough" to drive costs down or do much to reimagine the shuttle program: that problem was a dumb booster problem that had nothing to do with the shuttle directly and could have happened to any payload. (It was still terrible that it happened to that shuttle and its crew, specifically, of course.) It's curious to wonder if something more like the Columbia disaster, which did more reflect shuttle maintenance issues, may have had an interesting scientific impact if it had "switched places" in a different timeline.)
I wouldn't quite say "covered up" but the damage would have been a lot harder to hand-wave away if this had been a normal mission with all the media coverage those got.
It was worse than that. NASA never received sufficient funding for the STS. So they turned to the miltary who wanted it and were willing to fund it.
However, the military needs were also what made the space shuttle so stupidly hard to engineer. Think about how much harder all of the current commercial space programs would have it if they also had to engineer switching to a polar orbit. That's why the STS has those stupidly big engines.
So, because Congress neither gave the project sufficient funding (would take money from my favorite pork barrel!) nor allowed the project to shut down (don't you dare take away pork barrel from my district!), NASA created a vehicle that killed a bunch of astronauts.
[0] https://www.thedrive.com/the-war-zone/27506/vandenberg-afbs-...
Sure, at that moment in time. You are, however, discounting the abilities of clever people to innovate and improve the $/kg performance. I prefer to think we engineers are pretty good at reducing the effective cost of tech over time.
However, none of this is about Saturn V vs Shuttle vs some other platform. If NASA remained the sole customer over that period, there would not have been adequate incentives to drive that cost down. In that situation I think improvement would have been slow independent of platform choices.
It is the telecommunications age creating scaled incentives that has led to cost efficiencies and companies like SpaceX (and many others) competing to drive those costs down. Lacking the current scale of global incentives, SpaceX and others still wouldn't exist. They certainly couldn't have acquired the necessary funding back in the 70s.
I read a recebt biography about Von Braun and IIRC the entire project was designed to scale up, and all of that was hastily thrown away for the ineffective shuttle program.
The transistor, integrated circuit, surface mounted component robotic pick and place machine, laser and fiber optics. In the software world, countless of ideas. Open source too. Whole generations of software developers. All those were needed for the information age, not just throwing money to scale up Sage or Sabre or VAX or anything.
A more physical example is the rail network in the US. It's often asked "why don't we have high speed rail in the US?" Being a nation of autophiles obviously doesn't help but it's not as simple as putting higher speed trains on existing track. It's not even as simple as replacing the existing track with track that can take a higher speed train.
The rail network we had is an artifact of the performance constraints of 19th century trains for the most part. Top speed is the most visible constraint. But the grading, turning angles, etc are all a function of much lower constraint on top speed.
We'd probably be better off if we had no national rail network at all, which is pretty much the situation China was in. Admittedly there are other factors in China's rapid HSR deployments (eg streamlining planning and acquisition of land).
But I digress. Timing is hugely important in scaling.
As for HSR, do we really need it? It might make sense in the northeast corridor but it's hard to make a business case elsewhere. The California HSR project has turned into the usual government megaproject boondoggle with long delays and cost overruns. Even if it actually gets built I'll probably never ride on it.
One should look at the operational capacity, not the theoretical capacity. Who cares if you have an airplane that can theoretically do Mach 3 if it's being repaired in the hangar and you need it now? In airplane lingo a plane like that is called a "Hangar Queen"
Falcon 9 is a huge step in the operational direction. But more is needed. Can one do two flights in 24 hours? Can one save the second stage too? Just the fairing? Or can one make the second stage cheaper? Or salvage it in orbit?
There are other ways to reduce cost, such as cheaper rockets, more efficient fuels, etc. Whatever SpaceX does isn't the only possibility or a necessity.
The "cost" of Shuttle launches was calculated as NASA's entire manned spaceflight budget divided by the number of scheduled launches. They paid salaried staff all year no matter how many launches happened. That cost was trending downward as the number of launches increased prior to the Challenger disaster. After return to flight after Challenger NASA cut the launch schedule but had to pay the same infrastructure costs so Shuttle flights got more "expensive".
There was a project to make the Saturn V partially reusable, see
Highly relevant:
"Human Space Exploration: The Next 50 Years" by Michael Griffin, NASA Administrator, March 2007. He wrote that had the agency continued using Apollo-Saturn instead of developing the Space Shuttle, "we would be on Mars today <https://np.reddit.com/r/space/comments/5324ud/human_space_ex...>
In other words, NASA's budget was approximately 3% of the military budget (and maybe as little as 0.5%). NASA's budget has been less than 1% of the federal budget since 1975 [4].
[1] https://www.bea.gov/data/gdp/gross-domestic-product
[2] https://en.wikipedia.org/wiki/Budget_of_NASA
[3] https://www.statista.com/statistics/272473/us-military-spend...
[4] https://en.wikipedia.org/wiki/Budget_of_NASA#/media/File:NAS...
[5] https://en.wikipedia.org/wiki/Military_budget_of_the_United_...
The ironic thing is that Congress cancelled the Apollo program and approved the Space Shuttle program and that was even more expensive (in $/kg to LEO terms).
Payload costs are now <10% of the Saturn V/STS costs in real terms. That's what we need. If Satrship lives up to expectations, that'll drop even further. In addition to that there are important advancements in scalability (ie how many launch vehicles you can product and that really translates to how many launches you can do per year) and reliability.
My point is that whatever NASA wanted to do after Apollo was never going to happen and wasn't sustainable. Lots of people like to say things like we'd already have put a man on Mars if we didn't cancel Apollo but that was never going to happen.