The sheep are symbolic of a group mentality. That is important for this story because Santiago is searching for his Personal Legend, and that is a very individualistically focused task. He wants to follow his own path. He doesn't want to follow the rest of the herd and do what they do simply because they do it or have always done it. We can see Santiago already questioning going along with what everybody else does quite early on in the story when he realizes that his schedule might actually be controlled by the sheep and not the other way around.
Thinking about that for a moment, he realized that it could be the other way around: that it was he who had become accustomed to their schedule.
As the story's introduction continues, readers can see how Santiago is becoming more and more averse to the idea of sheep. He sees how their simple lives could bring contentment, but the more he thinks about it, the more negative his attitude is about not having individual thoughts and instincts. He...
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