Greetings
@scientia de summis,
Initial Catholic Perspective
As a theist myself, the problem of evil has always been fascinating. Now at this point of time I do not wish to create a response to the responses, but I will only respond to your original question. As a Catholic, I will first explain the Catholic standpoint on evil, and then I will present my own standpoint as a synthesis of many viewpoints. The Catholic standpoint rests upon the idea that God allows evil because God can create a greater good from the evil. As evil is a loss of good, it means that you gain greater good than what you lost, therefore a moral profit. Let me quote the Catechism of the Catholic Church to illuminate the official Church standpoint here.
But why did God not prevent the first man from sinning? St. Leo the Great responds, "Christ's inexpressible grace gave us blessings better than those the demon's envy had taken away."307 And St. Thomas Aquinas wrote, "There is nothing to prevent human nature's being raised up to something greater, even after sin; God permits evil in order to draw forth some greater good. Thus St. Paul says, 'Where sin increased, grace abounded all the more'; and the Exsultet sings, 'O happy fault,. . . which gained for us so great a Redeemer!
Pay attention to that statement of, "God permits evil in order to draw forth some greater good." From this single statement we can infer the psyche of God in viewing evil. In God's eyes, evil is not something absolute or immutable, it can be used to create something much better, albeit that evil is forever evil. There are many examples of this in action, either in the Catholic context or in the secular context. I will use only one example from each to illustrate my point.
In the Catholic context, Jesus Christ as the God-Man died on the cross and suffered infinite suffering in the process. However, the result of that infinite suffering is in truth infinite goodness which always rivals or is greater than the infinite suffering. This is due to the reproduction of goodness which I will explain later on. The infinite goodness is the glorification of the God-Man for all eternity by the purer God of God the Father in the Trinity and also by the Holy Spirit. However, of course He also receives glorification from humans, particularly Christians (excluding Mormons, Jehovah Witnesses, and other cults). All of that exceeds the suffering Jesus experiences.
From a secular standpoint, one may actually ask what is the benefit of World War 2? Now we do not know if WWII is a "final great war", but so far the lessons we learned in WWII has allowed us quite some global peace albeit not a local peace. It has caused a greater awareness in the law of war, the Geneva convention, war crimes, the maddening destruction of nuclear bombs, the UN, and many other good things. All of this good which came out of a terrible sacrifice that is WWII outweight the bads of WWII itself, as the horrors of WWII are temporary while the benefits will be experienced for a much longer time and be enjoyed by more people. There is an argument of how logically you need evil to produce good, but I will get to that in the later sections.
Personal Argumentation
There are numerous arguments to resolve the problem of evil, showing that from a higher perspective evil is not problematic if not serving a great purpose in goodness itself without itself being intrinsically good. At the final high perspective, we will reach the understanding that all things are good and have value and nothing has complete or absolute values of evil. Let us begin.
1. God is Love and the Existence of Free Will
In short, we have free will. Free will is however, not the kind of free will where "The total laws of reality does not determine your actions." Instead it leads to such statement, "We have a separate will from God, we are capable of having a will that is against God." However, such will is inevitably always determined fatalistically by the deterministic forces of reality and also of randomness. Though in the theist perspective, there could be truly no randomness in the physical level and only in the level of God, where we cannot foresee or see into the mind of God, lest we go insane.
God wants people to love Her, but God also wants them to love Her
purely and freely. This is not just because God wants people to love Her like that but it is also for our own benefit. Pure love is ecstatic and it liberates from all evil. Pure love is also free, in the sense that, "It is not done by the external coercion of God, or the coerced union of the human will with God's will." Pure love must be free as it is love which is born out of the total laws of reality, that is complete meaningful love. That is there is a clear beautiful pattern out of which love is born.
However, to allow for that, God must allow humans to have a separate will from Herself and be able to let the total forces of reality guide them to ways that God might not want morally. As such God allows us to have free will which allows moral evil, greater than natural evil, to enter into the world. This is however a rather rudimentary concept. Also the reason why I only address moral evil with this argument is because in the total absence of moral evil, that is with the perfect understanding of reality, then natural evil can never be a problem. It is seen only as a challenge. Let us consider the deductive form below:
PA. If X is not morally evil and if natural evil happens, they will not see natural evil as an absolute evil.
PB. X is not morally evil and natural evil happens.
C. X will not see natural evil as an absolute evil.
However, such argumentation require the justification that the lack of moral evil, or the perfect understanding of evil necessitates the acceptance of all evil as relatively good. This leads me to the next point of Moral Relativity and the Goodness of it All.
2. Moral Relativity and the Goodness of it All
Even in God's standpoint morality is relative. Masturbation is declared sinful by the Catholic Church as by principle it is against love. However, masturbation, as long as it is done in concordance with the principle of love, is not an offense against God. Now moral relativity means that the principle of morality, that is love, applies to every moral being, but that the manifestation is relative and can "contradict" between different levels of being. A lower being may be prohibited from masturbation as he will do it in egoism and selfishness. While me, capable of accessing heaven, will masturbate as a form of loving bond with God.
The idea that there is no real absolute evil arises from the idea that in truth, whether something is evil or good most of the time depends on our own perspective of that object. As such I call this distinction subjective moral objects and objective moral objects, from now on shortened to SMO and OMO. We live in a mixture of both OMO and SMO. OMO are those objects which are just objectively good or evil, such as physical injury. Murder itself is not an OMO because there are people who thinks that murder is good and as such commits murder. However, physical injuries are only OMOs at the low level, as a being progresses through moral development, physical injury will become impossible as the body becomes impassible.
As such it is certain that pretty much all of morality in this universe is based on SMO. What we believe about goodness determines our experience of that goodness. If we believe school to be evil, then we will experience school to be evil. Likewise, if we believe God as the absolute terrorist, that is what we will experience, unless someone comes to us and changes our perspective to understand deeper. The fact that there are people who have experienced immense joy from God and others who experience the deepest of hatred and rejections either towards or from God is strong evidence of this. In fact, I may even make a research on that in the future, so thanks for the inspiration.
Therefore, since evil and happiness can both be inputs to the moral function, and we get to determine the output of that moral function. The input can be anything but the output will always be happiness. As evil in itself as an experience has such value and meaning in itself. The most important thing in all values is meaning, that is patterns, archetypes, relationships, and unions. As evil serves all of that, it does have meaning and thus for the very least from a standpoint of meaning it is good. Though again if we say that evil is about suffering then yes evil is evil, but that suffering can become something good.
I have more to say, but God directs me to write sufficiently here. I will respond once anyone mentions me or responds to me.