Why does a good God permit evil in the world that he created? I'd like to suggest that what we sometimes think of as morally evil is, in fact, not morally evil, but falls under a different definition of functionally evil. In fact, some of what we think of as morally good, may also be mistaken and actually fall under a definition of functionally good.
Let’s define what we mean by Moral Evil, Functional Evil, Functional Good, and Moral Good.
Moral Evil is behavior, thoughts, and feelings that violate God's law, will, and character. These are behaviors that we always consider to be wrong and can never be right (Exodus 20:1-17). For instance, lying is a moral evil and is never considered a moral good. Adultery is always a moral evil and there is no context in which it can ever be good. The same is true with idol worship, theft, homosexuality, murder, coveting, etc.
Functional Evil is that which occurs in nature or within man's world that can cause harm, death, destruction, trouble, etc. In some cases, functional evil can lead to moral evil. An example of functional evil would be an earthquake that results in material destruction in a city and/or death. Functional evil is not a moral concern. Functional evil is not an attribute of personal behavior. Functional evil happens outside the will and control of man (unless initiated by man). Therefore, functional evil is not considered wrong in a moral sense. God sometimes uses or initiates the use of functional evil, but this does not make God morally evil (Deuteronomy 28:15-68). Moral evil and functional evil do not operate in the same sphere.
Functional Good is that in nature or within man's world that behaves according to its intended design and is considered to be beneficial to nature and/or man and is pleasing in some respect. We get the concept of functional good from Genesis, where God completes each creative act and calls the finished result, "Good" (Genesis 1:10,12,18,21,25,31), meaning that it functions according to his intended design, but is not described in terms of moral good. A sunny day is not a moral good, but is a functional good.
Moral Good is that which in the realm of personal behavior is considered to be true, right, selfless, loving, kind, faithful, loyal, etc. (Galatians 5:22-23). Biblically speaking, these are character traits that reflect the beneficial character of God. We are designed to be like God in our character (Genesis 1:26-28; Leviticus 11:44). Thus, when we behave in this way, we reflect the goodness of God's character and live according to his righteous will. Moral good is sometimes facilitated by functional good. For instance, a beautiful day outside would be considered a functional good. A father who takes his children to play outside in that beauty is a moral good.
More On Functional Good & Evil
There are times when a functional evil can become or be used as a functional good, that can lead to moral good. In many cases, we are mistaken about something we consider to be a functional evil when in fact, it may be a functional good—this depends, to a degree, on perspective. The thing most commonly misunderstood in this light is death.
How can death be a functional good? I'd like to suggest that death is both a functional evil and a functional good depending upon what or who dies. Let us keep in mind that death was not created by sin or by the devil. Here's a shocking thing to consider: Death was God's idea.
Death was built into the system that God created—before there was sin in the world. To many Christians this is a shocking reality. Allow me to make a brief case for this.
If Adam picked a banana off a tree and ate it, what would happen to the banana? Both the fruit and the peel would die. If Adam cut down a tree to make some fire wood on a cold evening, what would happen to the tree? It would die. These are simple examples of death as a functional good. The death of these things maintains life.
Even in the day in which we live, with sin in the world, there are times when we consider death to be a functional good. For instance, we slaughter a cow for meat. For the cow this is a functional evil, but for us this is a functional good. Eating is good because eating sustains life. If we sentence a person to death for a capital crime we consider this a functional good that protects society. If we go to war against an enemy doing moral evil we consider this a functional good—defeating and killing that enemy.
Consider that the first person in history to kill anything was God. In the Garden of Eden God slew and animal to make clothes of skin for Adam and Eve. God did not commit sin. He used a functional evil (killing the animal) to commit two morally good acts: clothing and sacrifice for sin.
Ultimately, for the person who does not know Jesus, death is a functional evil because death leads him to an eternity in hell. But death is not a moral evil. For the person who does know Jesus, death is a functional good as it brings him into the presence of his Savior.
Other Functional Good & Evil
Pain is a functional evil in that it is unpleasant and can be debilitating. However, in a real way, pain is also a functional good. We may not think so when we experience pain, but pain tells us something is wrong and needs repair or attention. Pain existed before Adam and Eve sinned since God told Eve he would "greatly multiply" her pain in childbirth, which implies that pain existed prior to sin (Genesis 3:16).
Functional evil can sometimes lead to moral good. Observe: the world is subject to death (functional evil). The death of one thing sustains the life of another (functional good). Life continues and is able to multiply (moral good).
Human death follows a similar track. Man sins (moral evil). Man is punished with death for sin (functional evil). Man repents (moral good). Man dies and goes to heaven (functional good). Man remains in God's presence and enjoys him forever (moral good).
We sometimes perceive of a functional evil as a moral evil because we don't perceive God as intervening to prevent its consequences. But God is not obligated by us or by anything outside of himself to eliminate or stop the consequences of functional evil. We do not have the eternal perspective that God has. He sees the end result, which may be the working out of a moral good originating through a functional evil.
Consider also that a functional evil is only considered evil because of its relationship to, or effects on the living. If an earthquake shakes a city and buildings are destroyed and people hurt, we think of this as evil. But if it happens in the countryside and nothing is destroyed or hurt, we don't consider it an evil.
Another example, the extinction events of the past eventually brought about products like petroleum and natural gas. The extinction events didn't happen to us, so we rarely think of it as an evil. We, in fact, consider its byproduct as a functional good. Modern life would be impossible without oil, coal, and the natural gas these extinction events eventually provided us.
As for moral evil, moral evil sometimes requires that God acts through a functional evil with the end result being a functional good that leads to a moral good. Judah and Israel's exile is one such example (II Kings 17). Judah violated the Mosaic Covenant (moral evil). God punished through exile (functional evil). In exile God instructs Judah to endure it and prosper (functional good). This leads Judah to recommit itself to the Mosaic Law and the worship of only one God (moral good).
King Manasseh of Judah is a prime example (II Chronicles 33:1-20). He commits more moral evil than any king in their history (moral evil). God sends him to exile and prison in Babylon (functional evil). In exile, Manasseh repents of his sin (moral good) and God returns him to his kingdom (functional good). After restoration Manasseh tries to undo all the evil he did earlier (moral good).
The death and resurrection of Jesus is another example. Man sins (moral evil). This leads to the death of Christ for sin (functional evil). Jesus rises (functional good). Men commit themselves to Christ (moral good).
Now that we understand these things, how do we apply them to our lives in a practical way? What good is this knowledge if I can't appropriate it?
First, understanding the difference between these functional and moral categories helps us discern what God is doing in our lives. When we experience functional evil (like Job did), we can know that God is not being morally evil with us. Something deeper may be going on. We don't have to blame God as if he is an evil force. He is not. He has the long view.
Second, it can strengthen our resolve through trial. Remember what Job said, "Shall we receive good from God and not receive evil?" (Job 2:10). Job was not referring to moral evil, he was referring to functional evil. Job understood the difference between functional and moral evil.
Third, we can discern God's actions on the world stage. For instance, an Arab missionary friend of mine in the Middle East recently told me, "If I ever meet someone from ISIS I will give him a big hug and thank him. I will say to him, ' Do you know how easy you have made my job?'" He says this because while ISIS is killing many Christians (moral evil) and they are fleeing war (functional evil), they are also causing millions of Muslims to reevaluate their faith in Islam (functional good) with the result that more Muslims are coming to Christ now than ever before (moral good). Sometimes the great evil we see around us brings about a good result in the long term.
Think about the many experiences you have had in your life. You can probably divide them up into our four categories of moral evil, functional evil, functional good, and moral good. Trace how those events led from one experience to another and you may discover that God's promise to you is literally true. "We know that for those who love God all things work together for good, for those who are called according to his purpose" (Romans 8:28).