Many atheists and agnostics find that the problem of evil is a problem that the gods of religion cannot recover from. Often a simple proof is used to prove that an omnipotent and benevolent God cannot exist. Below is one version of the proof.
1. If God is perfectly loving, He must wish to abolish evil.
2. If God is all powerful, He must be able to abolish evil
3. But Evil does exist
4. Therefore, an all powerful, loving God does not exist
Peter Kreeft explains the problem well, "...if God is so good, why is his world so bad? If an all-good, all-wise, all-loving, all-just, and all-powerful God is running the show, why does he seem to be doing such a miserable job of it? Why do bad things happen to good people?"
Peter Kreeft posed some excellent questions, but first we need a definition of what 'evil' is. H.J. McCloskey in his essay "God and Evil" thoroughly defines evil. McCloskey begins with the premise that there are two types of evil: physical evil and moral evil. "Moral evil is simply immorality - evils such as selfishness, envy, greed, deceit, cruelty, callousness, cowardice, and the larger-scale evils such as wars and the atrocities they involve." Physical evil, according to McCloskey, can be defined as "...involved in the very constitution of the earth and animal kingdom. There are deserts and icebound areas; there are dangerous animals of prey; as well as creatures such as scorpions and snakes." He continues with his definition, "There are the natural calamities and the immense human suffering that follows in their wake - fires, floods, tempests, tidal-waves, volcanoes, earthquakes, droughts, and famines. Thirdly, there are the vast numbers of diseases that torment and ravage man." To paraphrase; "Moral Evil" is evil that is caused by humans. "Physical Evil," is evil caused by natural occurrences and other things out of the control of humans. There are probably some gray areas in this definition, but I feel the definition adequately and properly divides and defines "evil."
Obviously many theists have seen and considered this proof. Yet they continue to believe in God. The question is: Why does this proof not work? If it does work: why do theists ignore it? In the following paragraphs I am going to explain how theists overcome the problem of evil. Then I am going to show why I feel the problem has not been overcome, but sidestepped. I do not believe that the existence of God can be logically disproven by the problem of evil. I do believe that theism can be logically disproven by the problem of evil. Theism struggles with problem of evil and, in my opinion, is only able to overcome the problem with assistance of faith.
For most theists the existence of "Moral Evil" is not a quandary. It should be a quandary for theists. Most theists believe in "Free Will," the idea that individuals are in control of themselves. They explain the existence of moral evil as a result of the benevolent gift of free will; which was given by God. The "free will excuse" places the blame of moral evil on humans. I agree that humans are responsible for some moral evil, but an omniscient and omnipotent God could create a world without moral evil.
Why did God create beings that would choose moral evil over moral good? Why did God create a world where moral evil is a viable option? A more generalized version of these questions is: is this the best possible world? The main theist response to this question is "this is the best possible world." They have to, or the existence of a theistic God would be refuted. The existence of God would be refuted because by his defined nature, in theism, God wants the best for humans. If this world was not the best possible world, then God would be shown to be not perfectly benevolent. Showing that God’s nature, according to theism, is wrong. If the nature of God is wrong or false; then theism is wrong or false. We must now ask: is this the best possible world? Most people would automatically say 'no, this not the best possible world.' A quick answer is not sufficient when considering the existence of God. I do think that is interesting that many people feel this not the best world, yet continue to believe in a benevolent God. What are the main theist responses to why this is the best possible world? One possible solution is that this is the best possible world for us. This idea rests on the idea that humans must face problems or evil in order to develop their souls. The question then becomes: is there too much evil in the world. Was the holocaust necessary to develop souls? Could a lesser evil have worked? 
I believe that a lesser evil could have replaced the Holocaust. This argument raises another question. Is suffering necessary or good? I believe that suffering is not. Most theists say, "We need to suffer to know ‘good’." No, we need to suffer to define ‘good’. If there was no suffering and good was all we knew, then there would not be a name for good, but good would still exist. Another response to the "best possible world" question is that there is no possible world. This is a quite lengthy quote from philosophyofreligion.info, but it adequately describes the idea. "The claim that there is no best possible world, that the idea of a perfect world is incoherent, is at least plausible. Although there are better and worse possible worlds, for any world that we can imagine we can imagine a way of making it better. We could for instance, increase the number of happy people contained by that world. As there is no intrinsic maximum number of happy people in the world, there is no world for which it is not possible to increase the number of happy people that it contains. Further, increasing the number of happy people in a world always makes that world better. It is therefore true of every world that it could be improved, and so true of no world that it is the best possible world. Thus far, the defense against the argument from imperfection appears to be on solid ground. The concern with this defense against the argument from imperfection is that it proves not only that the idea of a best possible world is incoherent, but also that the idea of a perfect Creator is incoherent. If this is the case, then the fact that there is no possible world not only rebuts the argument from imperfection but also disproves the existence of God. For if God is conceived of as a perfect Creator and if the idea of a perfect Creator is incoherent, then the existence of God is impossible." The best possible world, as I imagine it, is how many Christian describes Heaven. Heaven, for me, is all the souls in the universe living in happiness and harmony for eternity. What could be better? An infinite number of people; an omnipotent God could do it. I feel that the argument that there is no best possible world is not constant with Christian theology. How can an omnipotent God not be able to do something? It basically comes down to a question I asked as a child. Can God create a rock so heavy he can't lift it? The answer I received was: yes, but he wouldn't want too. I this case, a best possible world, he would want to. If there is no best possible world, there is no omnipotent God.
Is moral evil caused by physical evil; is physical evil caused by moral evil; does moral evil cause more moral evil? These are serious questions about moral evil. Was there looting in New Orleans because people where morally 
evil or because a physical evil, Katrina, made the moral evil of looting the best solution to their situation. I think that in reality a considerable amount of moral evil is partially caused by physical evil. Individuals are responsible for their own actions, but circumstances can lead to questionable actions. I want to refute the ridiculous idea that moral evil causes all physical evil. This is basically the idea that physical evil is God punishing people for their sins. There has never been a single incident of physical evil that was proven to be caused by moral evil. Many prominent Christians have tried to show an association between moral evil and physical evil. For example: Pastor Hagee, a prominent evangelical, said, "Hurricane Katrina was, in fact, the judgment of God against the city of New Orleans. New Orleans had a level of sin that was offensive to God," Hagee said, "because there was to be a homosexual parade there on the Monday that the Katrina came." Really? Every single person in New Orleans was homosexual? Or worth punishing? I don't think so. I think a series of natural causes led to hurricane Katrina. Does moral evil cause other moral evil? 
I think that this is one question that has an obvious answer. Yes. I want to consider just one case of a large moral evil leading to another moral evil. The moral evil I want to consider is slavery. (Note: slavery is justified in the bible. Leviticus 25:44-46 NLT. The KJV uses the word bondman, but does treat "bondman" as possessions. I'm not sure of the original Hebrew word or its proper translation.) My point is not to accuse religion of supporting slavery. In the past the bible was used by both abolitionists and slave owners to support their positions. Rev. Richard Fuller said in 1845, “What God sanctioned in the Old Testament, and permitted in the New, cannot be a sin.” I think most people today would say that slavery is wrong and a moral evil. Slavery led fairly directly to another large moral evil: the Civil War. From this example we can see that moral evil can cause even more moral evil. This does not mean that moral evil can cause physical evil.
The idea that humans are responsible for moral evil is based on the idea that humans have free will. Christians and most other theists consider free will a tenet of their theology. Not everyone believes that humans have free will. Robert Blatchford suggests that we can determine what people are going to do, "simply because we know that heredity and environment have so formed and molded men and women that under certain circumstances the action of their wills is certain." Determinism combined with evil lands a hard blow to theism in my opinion. There have been some responses by divine determinist, but I find these responses weak. Here is one of their responses. "God, in other words, could not have created a perfect world inhabited by perfect beings (since, on the monotheistic view, there can only be one perfect being). And the resultant imperfections necessarily bring about some measure of evil: a lack of knowledge, for example, entails some degree on ignorance, an evil in itself, which may also lead to other evils, such as the failure to choose(Note: how does someone in a determinist world choose?) the best course of action in some circumstances." Nick Trakakis, the author, is paraphrasing "the appeal to finitude." It suggests that all imperfection is evil, which I don't agree with. I don't need to agree that all imperfection is evil to disprove this theodicy. If God is determining every action, then imperfections could be kept to only affect the imperfect. For example, if a man had an imperfection that gave him schizophrenia, God could easily determine that that imperfection of evil would not affect anyone else. So how do explain when that schizophrenic shoots another person. Clearly the God of divine determinism could stop the evil, and being a determinist God he would. Yet he doesn't. Determinism is not compatible with Christian theology.
I began this discussion of moral evil by saying that many theists don't find the existence of moral evil to be a major problem. I believe that it takes the faith of a theist to allow God to overcome the existence of moral evil. In a sense, the existence of moral evil is not going to convince a theist, with faith, to be an atheist; nor is going to convince an atheist that God exists. It's another argument that can only move people that are sitting on the fence. I think that for people sitting on the fence, it probably tends to move them more towards atheism.
If moral evil dealt a blow to theism, then physical is capable of finishing theism. While theists are able to blame all moral evil on humans, physical evil can only be placed upon the shoulders of God. If God created the universe, which all theists maintain, then he must have created physical evil. If he did not create physical evil, then who did? If anyone but God created it then God would cease to be God. So now that we have established that God is responsible for physical evil; how do theists overcome this problem? Of course some Christians claim that all evil is an illusion. This is a good formulation of the argument that evil is not really evil, "what appears to human beings to be evil is merely the necessary by-product of the nature of things. If we could see things from the point of view of God we would understand their purpose and accept them as ultimately good." This argument basically says two things; evil isn't really evil and you can't know what is evil. The bible clearly shows example of things that are physical evil. If even the bible says evil is real how can theists today claim the evil isn't really evil? Do they believe that the bible is wrong? A real theist would not claim the evil isn't really evil. The idea that evil is an illusion is totally against what the bible says. We have now established physical evil is real and God is responsible for it.
I'm going to quote a Christian response to the problem of evil, specifically physical evil. "Diseases, pain, earthquakes, floods, and other natural disasters are examples of physical evils. 
God may use physical evil to chastise individuals or nations and lead them to repent (Isaiah 45:7, Genesis 6:13, Acts 13:9-11). Some physical evil may be the result of Adam's original sin (Genesis 3:6, Romans 5:12-14). God may use physical evil for a higher purpose: to test us and prepare us for glory (1 Peter 1:6-7, 5:10, 2 Corinthians 12:7-9), or to make us more compassionate (2 Corinthians 1:3-6). The suffering we endure now will be more than compensated by the glory of eternal life (2 Corinthians 4:16-18, Philippians 1:21-23). Physical evil is one means God uses to accomplish His work on earth (John 9:1-3)." Now I am going to dissect this response and show why it's wrong.
The first part says, "God may use physical evil to chastise individuals." Other than the word of various religious texts there is no evidence of this being true. The strongest evidence against this being true is that physical evil can affect a wide group of individuals. Surely when a hurricane hits the Florida coast God doesn't think everyone in Florida needs to be chastised. I think the lack of evidence for this idea proves it to be false for any rational person. The second part says, "Some physical evil may be the result of Adam's original sin." I don't really want to debate specific parts of doctrine, but the idea that evil exists because of one man is ridiculous. First off, evolution proves that the biblical creation myth is a myth. This proves that Adam is just part of a larger creation myth. It does seem odd that one man would cause evil to come upon a group of completely unrelated individuals. If the Adam is a myth, and he is, then this explanation is wrong. I am going to skip the third argument for now. It will be covered in the paragraph below, because it is the strongest argument. The last reason given for the existence of physical evil isn't really a reason at all, "...suffering we endure now will be more than compensated by the glory of eternal life." This isn't really a reason for evil to exist, more a comfort to those affected by evil.
The quoted paragraph repeats its strongest argument twice. "God may use physical evil for a higher purpose: to test us and prepare us for glory, or to make us more compassionate. ... Physical evil is one means God uses to accomplish His work on earth." This is an argument that arguably can't be proven wrong. Humans can't know God's will, because of his nature. Here are a few objections to this argument. Why do these bad things happen to good people? For arguments sake let's describe 'good people' as people who believe in God and follow his laws and commandments, including compassion. Good people don't need to be taught compassion. God's will is to bring people to God. Good people have already been brought to God, so God's will has been accomplished. The last reason that has been outlined for physical evil to affect good people is, “to test us and prepare us for glory.” The question becomes: does God really need to test someone who already believes in him? I think the idea that God tests people is masochistic. Christians seem to like pain; pain seems unnecessary to me. If God likes to test people with evil what does that make him? Is that a theist’s idea of perfection? It’s not mine. Does physical evil prepare someone for glory? To answer this question let’s define what glory is. ‘Glory’ is another word for heaven or the state a person will be in when they are in heaven. How do you prepare for a speech? You practice speaking; you write a speech. How would someone prepare for glory then? Well you do the same things that you would do when you’re glorified. We don’t know for sure what glory is, but we do know that glory won’t involve evil. So how then does physical evil prepare someone for glory? I don’t know. I don’t think physical evil prepares someone for glory. Physical evil affects good people for no apparent reason. Good people don't deserve to be affected by physical evil. Good people are affected by physical evil. The only theist response to the rebuttal I outlined is that good people do deserve to be affected by physical evil. I must say that I disagree. I think most people disagree.
Physical evil is only a problem for theism if you believe that good people don't deserve to be injured by physical evil. If you believe that good people should be affected by physical evil; then theism can still stand. The only way, I believe, that person can really, honestly believe physical evil should affect good people is through faith in the benevolence, omniscience and omnipotence of God. I don't have faith in such a God.
I asked a question at the beginning of this essay. That question was: how do theists overcome the problem of evil? Theists overcome moral evil, generally, by blaming it on the free will of humans. I don't completely accept the free will excuse, but it is responsible enough. How do theists overcome the problem of physical evil? Theists have to say that physical evil should affect people. I definitely don't accept this idea. Physical evil, it seems, is completely unnecessary. The real answer to how theists overcome the problem of evil is faith. Faith that God will be exactly what he (it) is portrayed to be in traditional theism. For those of us that don't have faith, atheists, agnostics and many others, the problem of evil is a serious flaw in religion and the idea of God. I would never tell someone the question there personal faith, but for me faith never made sense. I am naturally too skeptical to accept something on faith. To describe exactly why faith doesn't work for me, I'd like to quote the bible. "Your faith should not stand in the wisdom of men, but in the power of God." (1 Corinthians 2:5) That says it all; faith shouldn't come from science or evidence, but from fear of the power of God. I don't have faith, because I accept the wisdom of man as generally correct. With no faith the problem of evil is a hurdle that theism trips and falls on.
Note: The following is a list of the sources I used.
plato.stanford.edu/entries/evil/
www.infidels.org/library/modern/nontheism/atheism/evil.html
www.infidels.org/library/modern/quentin_smith/anthropic.html
www.wsu.edu/~brians/hum_303/evil.html
www.arsdiputandi.org/publish/articles/000183
www.philosophyofreligion.info/page_id=54
www.crvp.org/book/series01/I-24/chapter_viii
www.biblicaldefense.org/writings/the_problem_of_evil
mattweiner.net/blog/archives/000426.html
www.xenos.org/essays/evilpo.htm
www.geocities.com/paulntobin/godevil.html
Philosophy: Contemporary Perspectives on Perennial Issues. Eds: E.D. Klemke, A. David Kline, Robert Hollinger. Essays by H.J. McCloskey, "God and Evil" and John Hick, "The Problem of Evil."
The quote from Rev Fuller about slavery is from a book by Sam Harris. I can't remember if it's from The End of Faith or Letter to a Christian Nation.
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