Check out strong's Hebrew dictionary:
http://strongsnumbers.com/hebrew/7451.htm 7451. ra' (rah)
The Ancient Hebrew Research Center
http://www.ancient-hebrew.org/index.html
They note that the English word "evil" has no Ancient Hebrew equivalent, while most English translations will use the word "evil" it is usually the Hebrew word "ra" which simply means "bad". In the Ancient Hebrew mind there is no such thing as an "evil" person or thing. To understand the words "good" and "bad" from a more Hebraic understanding these words should be understood as "functional" and "dysfunctional".
The LORD (A)has made everything for its own purpose,
Even the (B)wicked for the day of evil.
That is simply saying the Lord made people. Some chose righteousness and some chose wickedness. He will reward the righteous and judge the evil. It is not saying he created wickedness. It is simply saying he created people with a freewill, both good and bad.
The biblical doctrine of foreknowledge simply states that God knows everything that will happen before it happens as in Psalms 139:4. James stated clearly, "Known unto God are all his works from the beginning of the world" (Acts 15: 18). For that to be true, God must have known everything related to what He would do. This biblical truth is clearly necessary if God is to be omnipotent, omniscient and omnipresent, the Creator and Sustainer of all. God did not preprogram people who chose doom without the ability to make that choice.
God never ordains or appoints them to sin, but they are given up to "the fruit of their own ways" according to the eternal counsel of God. God, in the active, is said to appoint Christ and the elect (directly). Unbelievers, in the passive, are said to be appointed. God ordains the wicked to punishment, not to crime. "Appointed" or "set" (not “FORE-ordained") refers to the penal justice of God. Through the same Christ whom sinners rejected of their own freewill, they shall be rejected and therefore appointed unto wrath. The lost shall lay all the blame of their ruin on their own sinful perversity, not on God's decree; the saved shall ascribe all the merit of their salvation to God's electing love and grace.
God hates evil (Ps. 45:7); God's jealousy burns with anger against sin (Deut. 29:20). The biblical Hebrew words for holy are godesh, meaning "apartness" or "sacredness," and gadosh, translated "sacred" or "holy." The Greek word hagios means "righteous," "holy," or "pious." God's holiness means that He is totally and utterly set apart from evil. It is important to understand that people and angels were not created evil by God but made so by their rebellion against God.
For example, Adam was free in the sense that his act was self-determined. God said, "You are free" (Gen. 2:16). When Adam chose to disobey, God him accountable. Adam could have chose not to eat the fruit. God nor the devil made him eat the fruit. The devil tempted Eve who brought the fruit to Adam. Adam was not forced but lured by the devil through Eve. In the same way, the devil beguiled Judas to betray Christ: "The devil had already prompted Judas Iscariot, son of Simon, to betray Jesus" (John l3:2). The Hebrew word used throughout the Old Testament for when God tempts someone is nacah which means to test or prove, as in assaying the purity of a metal. It has nothing to do with tempting to sin. God was not tempting Adam and Eve to sin when He told them not to eat of a particular tree; He was testing them. Eve was tempted by her own natural lust, her selfish desire. This shows that even in innocence mankind can be selfish and disobedient.
Neither Lucifer nor Adam, before their respective falls, had an evil nature. God is not the author or doer of sin." Nonetheless, that is the apparent result of determinist logic which argues that since God has kept all power in His own hands then God is responsible for evil because He created it. Put bluntly, this means that when a murder occurs, it is God who is accountable for the death of the victim, and when an takes assault place, it is God who indirectly caused the attack. But this is an incorrect position and the one who teaches it is in error for God is absolutely good and, as such, He cannot do (or be responsible for) evil. Early church fathers held this position and include Justin Martyr, Irenaeus, Athenagoras, Theophilius, Tatian, Bardesanes, Clement of Alexandria, Tertullian, Novatian, Origen, Methodius, Cyril of Jerusalem, Gregory of Nyssa, Jerome, John Chrysostom, Augustine (after converstion), Anselm, Thomas Aquinas, etc…
Even Christians don't always do God's will. That God promises to be found of those who seek Him surely implies that the unregenerate can seek Him if they choose to do so. Either man has a free will, or his sin is all according to God's will making God the author of evil and one of Calvin's errors. Could it be that Adam's nature was actually sinful, though God pronounced him "good" when He created him? How else, except by free will, can his sin be explained? The Calvinist escapes that problem by declaring that even the sin of Adam and Eve was foreordained and decreed by God.
God knows what will happen because He is all-knowing and therefore the future is as plain to Him as the past. If God had to plan and cause something to happen or even to control its occurrence in order to know it would take place He would be limited in His foreknowledge and therefore not the infinite, omniscient God that He is. Nowhere does the Bible state that God's sovereignty requires that man have no power to make a genuine choice, moral or otherwise. Obviously, if God's sovereignty makes man totally incapable of any moral choice, then God must sovereignly cause him to believe the gospel or not believe it like a programmed robot and this is simply not the case. That God is absolutely sovereign does not require that everything man thinks he chooses to do or not to do is not his choice at all but simply was known and in that way foreordained by God from eternity past. There is neither logical nor biblical reason why a sovereign God by His own sovereign design could not allow creatures made in His image the freedom of moral choice.
The origin of evil is a problem for any worldview, but particularly so for theism, which must account for how evil arose in a universe where God and everything He made were perfectly good. The answer is found in one of God's good gifts: free will. While freedom is good in itself, it also allowed the potential for evil. Hence, free will made evil possible. However, while God is responsible for the fact of freedom (which made evil possible), free creatures themselves (e.g., Lucifer and Adam) are responsible for their acts of freedom (which make evil actual). God gave them the power of choice, and instead of choosing to obey and follow the good, they disobeyed and exercised free choice for sin. Hence, evil arose from the free will of the good creatures that God made. God did not create evil.
What we are both saying is that you have to look at the context of the passage to see how the word is being used to accurately translate its meaning in that passage. Agreed. I would also agree that ancient Hebrews/Israelites and modern Jews all believe in both good and evil. However, ancient Hebrew culture was different in various ways from our own and every expository I've ever read about ancient Hebrew writing suggest they wrote in a matter trying to bring balance to their work and we see Isaiah contrasting darkness and light and peace and calamity (not evil as the form Isaiah used in verse 7 most often refers to calamity or distress). Ancient Hebrew has a limited vocabulary and words mean different things depending on how the author employed them.
An additional concern when using the King James Version which translates Isaiah 45:7 as, "I form the light, and create darkness: I make peace, and create evil: I the Lord do all these things" is that the King James Version uses an archaic version of modern English which doesn't necessarily mean the same things today as when it was translated over 400 years ago and also was produced using a limited number of medieval manuscripts that did not represent the earliest Alexandrian set of manuscripts. The translators of the New American Standard did use the earliest Alexandrian set of manuscripts and render an accurate modern translation as “The One forming light and creating darkness, causing well-being and creating calamity; I am the LORD who does all these..” which is fully in line with the ancient form of the word ra' and the manner of contrast Isaiah was using.
So we see that Isaiah is not saying that God created and is therefore controlling evil as you have suggested and that the King James translation is both substandard and the word choice outdated in this example.
So let's review. In order to understand what God was saying through the prophet Isaiah, we need to look at the words used in the text of Isaiah 45:7 . Hebrew words often have a wide variety of meanings, depending on the immediate context in which the word is used. The job of the translator is to accurately select the best modern English word that is closest to the meaning of the word used in the original Hebrew manuscripts.
The fact that ra' is contrasted to shalom, the Hebrew word for peace, helps to give parameters to the meaning of ra'. Shalom, again, is a rich word with broad meaning. Depending on the context, shalom can be translated "peace," "well-being," "welfare," "prosperity," "safe," "health," and "peaceable." in Isaiah 45:7 makes it evident that different translators interpreted the context of Isaiah 45 in different ways. Five different English translations are compared below.
I form the light, and create darkness: I make peace, and create evil: I the Lord do all these things (KJV).
I form the light, and create darkness, I make peace, and create calamity; I, the Lord, do all these things (NKJV).
I form the light and create darkness, I bring prosperity and create disaster; I, the Lord, do all these things (NIV).
The One forming light and creating darkness, causing well-being and creating calamity; I am the Lord who does all these (NASB).
I form light and create darkness, I make weal and create woe, I am the Lord, who does all these things (RSV).
The Hebrew term ra' has a broad spectrum of meanings. It can mean "wickedness," "mischief," "bad," "trouble," "hurt," "sore," "affliction," "ill," "adversity," "harm," "grievous," and "sad." Thus, as with the interpretation of any word, it is the immediate context that dictates the exact nuance of the word to be translated into English.
The fact that ra' is contrasted to shalom, the Hebrew word for peace, helps to give parameters to the meaning of ra'. Shalom, again, is a rich word with broad meaning. Depending on the context, shalom can be translated "peace," "well-being," "welfare," "prosperity," "safe," "health," and "peaceable."
The context of Isaiah 45:7 is a profound declaration of God's total sovereignty over the affairs of men. God's stunning revelation that Cyrus, the totalitarian ruler of Persia, was being chosen by Him to be "His anointed" ( Isaiah 45:1 ), the deliverer of the nation of Israel, was shocking to Isaiah's readers. This is especially true given God's clear denunciation of idolatry in the immediately preceding context ( Isaiah 44:6-23 ). The irony of this passage is that God reveals how He intends to use a pagan, idol-worshiping dictator like Cyrus to return His people Israel to the land from which they had been deposed by the Babylonian despot, Nebuchadnezzar.
In summing up the gamut of His awesome character and unpredictable ways (see also Isaiah 55:8-9 ), God declares:
I am the Lord, and there is no other; apart from Me there is no God. I will strengthen you, though you have not acknowledged Me, so that from the rising of the sun to the place of its setting men may know there is none besides Me. I am the Lord, and there is no other. I form the light and create darkness, I bring prosperity and create disaster; I, the Lord, do all these things (Isaiah 45:5-7 NIV).
This is the signature exclamation of the only sovereign potentate of the universe: "I did this!" From the beginning to the end, from light to darkness, from prosperity to disaster, all are the work of His hands. God uses even the most wicked and evil exploits of this world to bring about His glory and divine purposes. That is what is so awesome about God. Only He can take the most wicked, evil, and self-serving intentions and make good come out of them (see also Romans 8:28 ).
Does God create evil? Certainly not. If He was the author of evil, then He certainly would not be a good God that is worthy of worship and praise, much less trusted to have our well-being in mind. The idea of a good God creating His own enemy and the object of His wrath seems inconceivable. It would be inconsistent for a good God to mastermind the idea of evil, will it into existence, and still be considered a good God.
Rather, God created man in His image with the freedom to choose. With this freedom came the opportunity to rebel against Him. Man did rebel ( Genesis 3 ), and the rest is history. The annals of human history chronicle how God uses everything -- even the chaos of this world -- to bring about His glory and purposes. Those purposes include our growth in becoming more Christlike.
What's the point of Isaiah 45:7? God reveals His almighty and awesome character to us so we can relax with the confidence that comes from knowing, even in the most dark, desperate, and discouraging times in our lives, God is up to something good for us all the time. God is not revealing that he created and is therefore controlling all the evil in the world. He's greater than evil is, able to turn an evil circumstance into a good one (like when a drug addict gets saved and then becomes a drug counselor for example helping others), and able to allow evil for a temporary period of time in this universe for eternal greater good: but he is not causing it to occur. As previously discussed, evil is something that manifests through created beings apart from God.
What I find disturbing is that He allows evil to hurt and damage us even after we repent but most of your Christian theologians simply it's temporary and for the greater eternal good. Doesn't feel like it though.