Let there be no mistake about it. The Torah offers reward for those who keep its commandments, and punishment (usually at the hands of G-d in the next world) to those who don't. Both the written and oral divisions of the Torah are filled with clear proof. (See Genesis 4:7, 6:13, Deuteronomy 8:1-20 etc...).
However, this does open up a bit of a can of worms. If G-d knows all that happens in this world and He is interested (and not merely a casual observer) and He rewards and punishes His creations for their actions, then we might be tempted to ask a couple of questions about the way the world is run.
If G-d knows everything, where is our free will? And if we assume that there is indeed free will, what happens when my choice to harm my next door neighbor (did you see what his kids did to my lawn?) conflicts with G-d's plans (He doesn't want my neighbor harmed)?
Every time we see something bad happening to someone good, we have to ask ourselves three questions.
Is this something really bad? Perhaps loosing your wallet at the airport kept you from a flight that was destined to crash. More subtly, perhaps the experience of loosing the wallet enriched your quality as a human being.
Is this someone really good? By what standards do we judge "good" and "bad?" So he doesn't cheat his clients... but does he yell at his wife? What does he do when no one's looking? In other words, we just don't know enough about any one person (or even about ourselves) to judge.
Is a tranquil, comfortable life really "good?" Maybe we're only here to prepare for a better, more permanent world. Maybe too much comfort "here" takes away from the real reward "there."
This isn't to suggest that there's no validity to a person's sense of suffering or that we have no obligation to offer understanding and comfort. But can we ever be sure that the suffering is actually unjust from a theological perspective? Perhaps not.
The issue of free will vs. G-d's foreknowledge of events is difficult. It's impossible to sweet talk an answer out of this one. Don't believe it's a tough one? Maimonides (Mishna Torah Hilchos Teshuva, 5:5) claims that "the intelligence of a human being can't fully understand this matter." And the Ra'avad (ibid), who does present a resolution, nevertheless qualifies it by calling it a "partial answer...."
While I'm aware of the reservations of those greater than me, let me present one possible solution, for whatever it's worth.
One might say that it's not that G-d has "always been here and always will," but rather, He's "beyond time" - time doesn't affect Him.
I might "know" what will happen to my car in ten years. It will probably rust some more, its transmission will stop working completely, etc. But that knowledge isn't 100% definite, it might not go that way. If I were to somehow know my car's future with 100% clarity, than I would have taken away the free will of its driver (me - I might wreck it tomorrow, or I might stop maintaining it etc.).
But that's only because I am "within time." G-d, on the other hand, is always present. Each and every moment of the universe's history is "now" in His eyes. Knowing what "will" happen isn't a prediction, but an observation of what to Him is really happening now, and that ability to observe does not take away anyone's free will.
There is a second "free will" issue:
If I have complete free will to do as I please (understanding that I'll be rewarded/punished for my actions), what would happen if I decided to kill my next door neighbor? Everything would be fine if his death fit into G-d's plan - into Divine destiny - but what if my neighbor was a good person slated to live another fifty years? If my free will is absolute, then he'll die, but what about his next fifty years? If destiny is absolute, then where's my free will?
Here, too, there are a number of approaches, but we'll choose that of the medieval author of the "Chovos Halevavos" ("The Duties of the Heart" - see "Shaar Bitachon"). According to the "Chovos Halevavos", we all have three levels of free will.
The free will to decide whether or not to carry out an action.
The free will to conclude definitely that that is what we'll do.
The free will to actually act.
If there is nothing in G-d's plan for the world that contradicts the decision of any particular person, that person will be allowed to bring his free will to fruition.
But if my choice conflicts with someone else's destiny (eg. my neighbor), then G-d will punish/reward me for my decision and conclusion, but will not allow me to act. Under normal circumstances, G-d will not punish/reward a person as though they had acted.
Sometimes we find that when the classical Jewish scholars discuss reward and punishment, they often use calculations like "a person who has done more positive commandments than negative commandments" (eg. Talmud Bavli, Rosh Hashana 16b). They don't mean that G-d sits counting the number of Mitzvos (commandments), but rather, that the value of each Mitzvah is measured. By way of example, one difficult-to-accomplish Mitzvah might be worth more than 100 easy ones.
Rabbi E.E. Dessler wrote (Michtav M'Eliyahu, Hebrew edition, book 1, page 113) that someone born into a family that raises him to keep Mitzvos as a matter of course, will receive relatively little reward for those Mitzvos - because they took no real effort. Keeping most of the commandments were almost automatic for him. Conversely, someone born to a criminal family far from a religious life, will receive very little (if any) punishment for not spending 17 hours a day in deep, intensive Torah study.
A Jew's attention should be focused on the tests that face him right now. For the criminal, the test might lie in not killing the man he robs, but certainly not with, say, Sabbath observance. For the scion of the fine Jerusalem family, the test might be in not wasting even five minutes of the precious time that could be used for Torah study, but he'll get nearly nothing for not killing.
Our job in this world, is to constantly push our "point of essential free will" higher and higher - thereby making old tests obsolete and bringing us to new, higher levels of Divine service.
Rabbi Boruch Clinton teaches at the Ottawa Torah Institute yeshiva high
school and Machon Sarah high school for girls (both in Ottawa, Canada).
You may reach him with comments and questions at