The Real Shlemiel(1995)

Original title: Die Schelme von Schelm

When God distributed wiseness and foolishness through a newly created world, one of the cherubs accidentally dropped all the foolishness on a tiny village called Chelm. So everyone in the village is very dumb. Recently orphaned boy Aaron and his friendly goat Zlateh live there with Aaron's uncle Shlemiel. When an evil sorcerer and his monster attack the village, Aaron and Zlateh have to defend it themselves.