Absolutely right. In Carter's position I would have made the same call, because I'm sure somebody at NASA would have convinced me that reusable must be inherently cheaper eventually, and that we need to go through these growing pains to debug the technology. But in hindsight it was the wrong call, and it set space exploration into a malaise from which is has not yet emerged.
Well, SpaceX and BlueOrigin are crowing about "resuable" being the future of space flight, you might argue that in abstract, idea of the Space Shuttle program wasn't wrong, it was just the wrong architecture**, executed all over a huge geography to get funding instead of efficiently (kinda like Airbus Planes), and managed like a huge bureaucracy (like any other govt program).
I would argue that even theoretically, you could have only fixed 1 out of the 3 issue, and the biggest problem is that it inevitably (because of the funding) became too big to fail which means once it gets to the wrong direction, it's too late making it nearly impossible to fix a wrong architecture.
However, the "malaise" of space exploration isn't really a function of the shuttle. Perhaps it set manned exploration back a decade or so, but space isn't going anywhere. The "malaise" is really because there's no immediacy to the problem (e.g. beat the Russians). Remember, the "space" budget is really a jobs-and-kickbacks budget that happens to to spent of space *stuff*. It's 100% discretionary spending (like a household budget for Netflix or a vacation in Greece).
Sometimes, you want to spend your discretionary money on Netflix, sometimes you want to take a trip to Greece with your money because your friends say it's the best vacation. Maybe your family debates that and makes a decision. However, sometimes you make the executive decision to spend that money to climb Kilimanjaro not because it is easy, but because none of your friends have gone there before and you want to be the first to take a selfie from space (oops, I mean Kilimanjaro, Virgin Galactic isn't operational yet) . To help sell that Kilimanjaro idea, you agree to make a stop-over in Miami for a couple days where your wife's family was from and you agree to buy the kids a new ipad for the trip. Congratulations, you get the trip, but long after the trip, when the selfies have scrolled off the bottom of your Facebook timeline, lament you've been missing out on House of Cards and regret sets in as you open your credit card bill.
If you made the other decision, you would probably still regret it watching House of Cards, trying to forget your friends Instagram pictures from Greece and save up for a trip next year, but really, just get over it, like all discretionary spending, it's never totally satisfying to rehash regrets unless they materially affect your life.
If things are more *immediate* (e.g, you thought your kid had 6months to live), maybe you'd choose to max out your credit cards to take that Greece vacation now (and do the Netflix too). Taking trips around the globe might be a more exhilarating way to live, but probably less sustainable.. China and India are probably spending far less than the US did for their space exploration programs because they effectively waited for the technology curve was more favorable. Space ain't going anywhere anytime soon and maybe we need a bit more "malaise" from our discretionary government spending programs.
**the Shuttle architecture (like others) is only nominally "resuable": SRB is toasted, a recovered external fuel tank needs rework, as does the shuttle engines. Similarly, Falcon has second stage which is toasted, a recovered first stage which needs rework and the Dragon is theoretically about as reusable as the shuttle. Not too different abstractly, but arguably a better architecture.