What I just read is very much an unpolished jewel. I think there's definitely something there, but it needs more work to really let it shine. Your introduction could be smoother - don't be afraid to just state where we are and what's going on, especially for a short story. Be clear and concise and it won't be too intrusive. Your dialogue is good, but - and this was something I had to drill into myself - as a writer, your best practice is only to use 'said' to tag dialogue - when you tag it at all. Using 'claims', 'responds', and the like is actually redundant; we can tell the speaker is making a claim or responding to another character by what's being said.
I enjoyed your premise here, with dogmatic human morality contrasted against the freewheeling, creative goblins. Again - what's there is rough, but promising. Keep writing and polishing your craft; you have the potential to be a great writer!